US STOCKS-Wall St drops more than 1 percent on Fed stimulus worries
* Strong data raises questions on Fed stimulus timing
* Smithfield shares soar, China's Shuanghui to buy
* SLM Corp jumps on plan to split into two companies
* Indexes off: Dow 1.1 pct; S&P 1.2 pct; Nasdaq 1 pct
By Angela Moon
NEW YORK, May 29 (Reuters) - U.S. stocks fell more than 1 percent on Wednesday, retreating sharply from record levels scaled recently, on concerns the U.S. Federal Reserve may start to ease up on its economy-boosting stimulus program.
The decline in equities followed a sudden move in U.S. Treasuries on expectations that the Fed will begin to pare its monetary stimulus as the U.S. economy improves.
The retreat was broad across all sectors, with telecoms and utilities stocks among the day's top decliners. The S&P telecoms sector index lost 2.2 percent and utilities sector index fell 2.1 percent.
Supportive monetary policies from central banks around the world have lifted equity markets this year, with the S&P 500 up almost 16 percent. On Tuesday, stocks soared and the Dow closed at a record high after the Bank of Japan and European Central Bank reassured investors that policies designed to boost economic growth would stay in place.
Last week, indexes fell on concerns that the program may be scaled back sooner than expected, and strong economic data on Tuesday stirred speculation that the Fed may begin tapering off its program soon. The concerns sent U.S. Treasury debt yields to their highest levels in over a year and pulled equities back from session highs.
While strong corporate earnings have also contributed to the equity market's surge in 2013, central bank stimulus has encouraged investors to add to positions as the equity market dipped, limiting extended selloffs. Any change to the stimulus program may prompt a round of profit taking.
"Market valuations are a bit above historical average valuations. (But) there continue to be numerous stocks with good growth opportunities at bargain prices," said David Brown, chief market strategist at Sabrient Systems, an independent equity research firm based in Santa Barbara, California.
Brown said utilities, telecoms and consumer non-cyclicals were sectors that investors should avoid as they were considered fully priced.
The Dow Jones industrial average was down 174.79 points, or 1.13 percent, at 15,234.60. The Standard & Poor's 500 Index was down 19.49 points, or 1.17 percent, at 1,640.57. The Nasdaq Composite Index was down 36.40 points, or 1.04 percent, at 3,452.49.
The benchmark 10-year U.S. Treasury note was up 5/32, with the yield at 2.1492 percent.
Cyclical companies, closely tied to the pace of economic growth, have been volatile amid the uncertainty over how long the Fed will continue its stimulus measures.
U.S. Steel Corp fell 2.6 percent to $17.99 and Cliffs Natural Resources lost more than 7 percent to $18.65.
In company news, Smithfield Foods surged 25 percent to $32.48 after China's Shuanghui Group agreed to buy the company for $34 a share.
SLM Corp rose 4.7 percent to $24.06 as the S&P's biggest percentage gainer after the student loan provider said it would split the company into two publicly traded entities and named John Remondi its chief executive officer.
Trina Solar Ltd slumped 13.5 percent to $5.87 after reporting its seventh straight quarterly loss.
Apple Inc Chief Executive Tim Cook said late Wednesday he expected the tech giant to release "several more game changers," hinting that wearable computers could be among them. Shares edged 0.4 percent higher to $442.94.
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