* Investors watch struggling small-cap index
* Deere shares fall after results; Macy's dips
* Dow down 0.6 pct, S&P 500 down 0.5 pct, Nasdaq down 0.7
(Updates to close)
By Caroline Valetkevitch
NEW YORK, May 14 U.S. stocks fell on Wednesday,
with the Dow and S&P 500 retreating from recent record highs, as
small caps resumed their sell-off and consumer discretionary
The S&P consumer discretionary index was down 1.1
percent and led the decline on the S&P 500. The S&P retail index
lost 1.1 percent.
Macy's shares dipped 0.2 percent to $57.83 after the
department store operator reported sales that missed
expectations. Retailer Fossil Group Inc
was the biggest percentage decliner on the S&P 500, a day after
it gave a second-quarter profit outlook that was much lower than
expected. Shares sank 10.3 percent to $100.00.
Some analysts are focusing on retailers' results for signs
the economy is stabilizing after weakness over the winter
"A lot of people are looking for evidence to confirm the
tough winter was the only reason we saw slowing" in economic
activity, said Joe Bell, senior equity analyst at Schaeffer's
Investment Research in Cincinnati, Ohio.
The Russell 2000 index of small-cap stocks dropped
1.6 percent, underperforming the benchmark S&P 500 and extending
a divergence that has been pronounced throughout 2014.
The Dow Jones industrial average fell 101.47 points,
or 0.61 percent, to 16,613.97, the S&P 500 lost 8.92
points, or 0.47 percent, to 1,888.53, and the Nasdaq Composite
dropped 29.54 points, or 0.72 percent, to 4,100.63.
At its session low on Friday, the Russell 2000 was down
exactly 10 percent from the intraday record high set in early
March. Some analysts are concerned that persistent weakness in
small-caps could spread throughout the market.
The S&P 500 is coming off three straight daily advances,
marking record closing highs for the last two sessions. On
Tuesday it climbed above 1,900 for the first time. The Dow ended
at record highs for the three previous sessions.
The biggest drag on both the Dow and the S&P 500 on
Wednesday was IBM, whose shares shed 1.8 percent to
$188.72. IBM said in a filing it expects hardware profit to be
flat year-over-year in 2014.
Among other decliners, Deere & Co fell 2 percent to
$91.70. The farm equipment company cut its full-year sales
outlook even as it reported a better-than-expected quarterly
In late afternoon trading, Wal-Mart shares fell
sharply in an instant as volume spiked in an out-of-the-ordinary
mini "flash crash," data showed. The stock ended down 0.5
percent at $78.74.
Shares of online retailer Zulily Inc shot up 9.3
percent to $34.99 in heavy volume of more than 9.7 million
shares, after dropping to a record low earlier in the day
following the expiration of the lockup period after its initial
public offering in November.
U.S. data showed potential signs inflation pressures may be
creeping up. Producer prices recorded their largest increase in
1-1/2 years in April as food prices surged.
Shares of The New York Times Co dropped 4.5 percent
to $15.06 after an unexpected announcement by the company that
managing editor Dean Baquet would take over as executive editor
of the company's flagship newspaper, effective immediately. The
company did not say why Jill Abramson was departing as executive
About 5.3 billion shares changed hands on U.S. exchanges,
below the 6.1 billion month-to-date average, according to data
from BATS Global Markets.
(Editing by Bernadette Baum, Nick Zieminski)