* Obama to nominate Yellen as Federal Reserve chief
* Nasdaq takes brunt of declines as year's winners falter
* Wall St looking past Washington gridlock at more
* Indexes off: Dow 0.4 pct, S&P 0.5 pct, Nasdaq 1.2 pct
By Julia Edwards
NEW YORK, Oct 9 U.S. stocks fell on Wednesday,
with the Nasdaq composite index down 1 percent, as investors
sold the year's biggest winning shares, including major tech
The Nasdaq 100 index's drop was the biggest three-day fall
since June 2012.
With the political standoff over the budget and debt-limit
dragging on, the market derived little solace from the expected
nomination of Janet Yellen as the next head of the U.S. Federal
The recent weakness in technology shares, particularly
social media stocks and others that have led the market
throughout 2013, continued.
On Wednesday, Amazon.com and Facebook were
the biggest drags on the Nasdaq 100. Netflix was down 4.7
percent to $288.36. This index has lost 4 percent since its
close on October 2.
The CBOE Volatility Index, a measure of investor
anxiety, continued to rise, hitting 21.12, highest since June. A
level above 20 is generally associated with increasing concern
about the near-term direction of the market.
Yum! Brands Inc fell 8.4 percent to $65.30 as both
the worst performer and biggest drag on the S&P 500 after the
KFC parent warned it will take longer than expected for
restaurant sales to rebound in China, which accounts for more
than half the company's overall operating profit.
The Dow Jones industrial average fell 51.32 points or
0.35 percent, to 14,725.21, the S&P 500 lost 8.32 points
or 0.5 percent, to 1,647.13 and the Nasdaq Composite
dropped 43.596 points or 1.18 percent, to 3,651.238.
U.S. President Barack Obama will nominate Yellen, currently
the No. 2 at the Fed, on Wednesday at the White House at 3 p.m.
(1900 GMT), a White House official said.
Investors expect her to tread carefully in winding down the
Fed's economic stimulus and provide continuity with the policies
of Fed Chairman Ben Bernanke, whose second term is due to expire
on Jan. 31.
The S&P 500 dropped 1.2 percent on Tuesday, its worst
decline since Aug. 27, sending the benchmark index to its lowest
level since Sept. 6 as traders cashed in gains in some of the
year's highest performing tech stocks.
The expected nomination of Yellen and the fiscal crisis may
eclipse surprising corporate earning reports, many of which are
due out next week, noted Adrian Cronje, chief investment officer
at Balentine, an investment firm in Atlanta, Georgia that holds
$1.6 billion in assets under management.
"It is really important not to become too distracted by
Yellen and the Washington stalemate," said Cronje. "Keep one eye
on what is unfolding at the onset of corporate earnings season
because if the earnings do not meet expectations, you could find
the market becoming vulnerable very quickly."
A poll by Reuters showed Wall Street strategists expect the
market to rebound toward the end of the year.
According to Thomson Reuters data, third-quarter earnings
are expected to grow 4.3 percent and revenue 3 percent.
In Washington, Obama said he would not hold talks on ways to
end the fiscal impasse while under threat from conservative
Republicans but agreed to discuss anything, including Obamacare,
if opponents restore government funding and raise the debt
The crisis in Washington threatens to damage the credit
standing of the United States and to derail the recovery.
Men's Wearhouse rose 27.9 percent to $45.07 after it
rejected smaller rival Jos. A. Bank Clothiers Inc's
$2.3 billion takeover offer, saying it significantly undervalued
the company and could raise antitrust issues. Jos. A. Bank
shares rose 7.7 percent to $46.34.
Ariad Pharmaceuticals Inc shares plunged 71.7
percent to $4.86 after the company said the U.S. Food and Drug
Administration had placed a partial hold on patient enrollment
for trials of its cancer drug Iclusig.