* S&P 500 breaches 50-day moving average
* All 10 S&P sectors lower, consumer staples weakest
* Indexes down: Dow 1.5, S&P 1.6 pct, Nasdaq 1.6 pct
By Alison Griswold
NEW YORK, June 20 The Federal Reserve's plans to
begin winding down its massive monetary stimulus later this year
hit shares on Wall Street for a second day Thursday, putting the
S&P 500 index on track for its worst two-day decline in seven
Stocks were down across all sectors, extending a selloff
sparked by Fed Chairman Ben Bernanke's comments Wednesday on how
the Fed might begin to withdraw its $85 billion in monthly bond
purchases before the end of the year as the economy improves.
Those stimulus measures, along with sturdy corporate
profits, have propped up the U.S. equity market this year, and
boosted the markets to record highs in May.
The selling pushed the S&P 500 below its 50-day moving
average, a key technical measure of the recent trend in stocks.
It has closed below that technical level on only one day this
year, in mid-April, and a break below it could add to selling
pressure. Investors were likely to watch the 1,600 level on the
S&P 500 as a further support area.
"I think the markets are going to be very sensitive to all
economic reports - anything that suggests that growth is picking
up, that the Fed really is going to scale back bond purchases,"
said Bruce Bittles, chief investment strategist at Robert W.
Baird & Co. in Nashville.
Among the sectors getting hit hard were homebuilders, down 5
percent on concerns that higher borrowing rates will reduce
housing activity. That came even though sales of existing U.S.
homes rose in May to a three-and-a-half-year high.
Builder PulteGroup Inc fell nearly 11 percent and
its trading volume was heavy at about 150 percent of its average
volume over the last 30 days.
The S&P now sits about 4 percent below its all-time closing
high on May 21 of 1,669.16. Other markets around the world have
been hurt much more, with the MSCI's all-country world markets
index dropping 3.1 percent, its largest
single-day drop in 19 months. That index has lost 6.8 percent
from the May 21 close.
Each of the 10 S&P industry sectors fell more than 1 percent
with consumer staples leading the losses with a 2
percent drop. Kroger fell 5.1 percent after the company
said its sales growth missed expectations in the first quarter.
The Dow Jones industrial average was down 222.32
points, or 1.47 percent, at 14,889.87. The Standard & Poor's 500
Index was down 25.99 points, or 1.60 percent, at
1,602.94. The Nasdaq Composite Index was down 55.63
points, or 1.62 percent, at 3,387.57.
Walt Disney shares fell 2.7 percent to $62.59 after
Goldman Sachs removed the stock from its "conviction buy" list.
Shares of Ebix Inc lost 42.8 percent to $11.27, a
day after the insurance software provider said that it and an
affiliate of Goldman Sachs would cancel their planned
merger after U.S regulators started an investigation into
allegations of misconduct at Ebix.