* Fed officials' remarks create uncertainty over stimulus
* S&P 500 falls below its 14-day moving average
* Walt Disney drags on Dow after results
* Dow off 0.3 pct; S&P 500 down 0.4 pct; Nasdaq off 0.3 pct
By Chuck Mikolajczak
NEW YORK, Aug 7 U.S. stocks lost ground for a
third consecutive session on Wednesday on growing uncertainty
over when the Federal Reserve may start to wind down its
stimulus, which has been a driving force behind the rally in
equities this year.
Even after the benchmark S&P 500 index suffered its biggest
decline since June 24 on Tuesday, the market was unable to
bounce back following comments from a pair of Fed officials that
gave little clarity to how soon the central bank might reduce
its bond-buying program.
The S&P 500 broke below 1,694.06, its 14-day moving average,
which had served as a support level. The broad market index is
down 1.1 percent for the week, on track for the worst weekly
performance since a drop of 2.1 percent during the week of June
21 after the Fed's last policy meeting.
However, the index is still up 18.6 percent this year after
closing at a record high on Friday.
"People were concerned about the extent of the rally in the
short term, and some people are talking about equities being too
expensive relative to the underlying fundamentals," said Stephen
Massocca, managing director at Wedbush Equity Management LLC in
"And of course, the big story, the next big piece of news,
one would think, is the taper tantrum."
Federal Reserve Bank of Cleveland President Sandra Pianalto
said on Wednesday that the central bank would be prepared to
scale back asset purchases if the labor market remains on the
stronger path followed since last fall.
The Dow Jones industrial average fell 48.07 points or
0.31 percent, to end at 15,470.67. The S&P 500 declined
6.46 points or 0.38 percent, to 1,690.91. The Nasdaq Composite
dropped 11.761 points or 0.32 percent, to 3,654.009.
Volume was once again light, with about 5.49 billion shares
traded on the New York Stock Exchange, the NYSE MKT and Nasdaq,
far below the daily average of 6.35 billion. Volume on Monday
was the lowest of the year for a full trading session.
Walt Disney Co was the Dow's worst performer. The
stock fell 1.7 percent to $65.91 a day after the company
projected a massive loss on its film "The Lone Ranger," though
adjusted earnings slightly beat expectations.
First Solar Inc shares plunged 13.4 percent to
$40.47 a day after the solar panel manufacturer reported results
that missed expectations and cut its full-year outlook.
Ralph Lauren Corp shares fell 8.6 percent to $173.13
after the fashion retailer reported a lower profit and
disappointing sales at its own stores.
The two stocks were the S&P 500's worst
Equity markets have been closely tied to central bank
policy, with many investors concerned that economic growth isn't
robust enough to boost stocks without the Fed's help. Last week,
the July payroll report was much weaker than expected.
Charles Evans, the president of the Federal Reserve Bank of
Chicago, said on Tuesday that the Fed would probably scale back
its bond-buying program later this year, perhaps beginning as
early as next month, depending on economic data.
That echoed comments made earlier on Tuesday by Dennis
Lockhart, the president of the Federal Reserve Bank of Atlanta,
though he told Market News International that the Fed might
continue its stimulus program if growth doesn't meet its
Of the 434 companies in the S&P 500 that had reported
earnings through Wednesday morning, Thomson Reuters data showed
that 66.8 percent topped analysts' expectations, in line with
the 67 percent beat rate over the past four quarters. On the
revenue side, 54.1 percent have reported revenue above
estimates, more than in the past four quarters, but below the 61
percent average since 2002.
Declining stocks outnumbered advancing ones on the NYSE by a
ratio of about 7 to 3, while on the Nasdaq, about two stocks
fell for every one that rose.