* 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 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
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.