* Rising bond yields, Fed policy course weigh on equities
* Wal-Mart slumps after results; Cisco drags on technology
* Indexes down: Dow 1.4 pct, S&P 1.4 pct, Nasdaq 1.6 pct
By Havovi Cooper
NEW YORK, Aug 15 U.S. stocks saw their biggest
fall since late June on Thursday in the wake of disappointing
results from Wal-Mart and Cisco, and sturdy economic data that
may set the stage for the Federal Reserve to scale back its
Data showed consumer prices rose broadly in July and new
claims for jobless benefits fell to a near six-year low last
week, factors which could draw the Fed closer toward trimming
its $85-billion monthly bond-buying program.
Those stimulus measures have kept interest rates low and
buoyed equity markets this year, but on Thursday, U.S. Treasury
yields hit two-year highs. Higher rates raise borrowing costs
for consumers and companies and reduce the attractiveness of
equities relative to higher-yielding bonds.
"The speed at which bond yields have increased has caught
investors off-guard," said Dan Greenhaus, chief global
strategist at BTIG in New York.
Wal-Mart shares fell 2.3 percent to $74.63 after
the discount retailer posted disappointing same-store sales and
missed revenue estimates for a fifth consecutive quarter. The
company also lowered its revenue and profit forecasts for the
"The Wal-Mart earnings report is as big a macro indicator as
(gross domestic product data)," said Nicholas Colas, chief
market strategist at ConvergEx Group in New York.
"It shows that (consumer spending) isn't that strong yet -
inflation is rising, wages are not, unemployment is still pretty
high and that's not a recipe for a strong retail environment."
The Dow Jones industrial average fell 221.17 points,
or 1.44 percent, to 15,116.49, the S&P 500 lost 23.88
points, or 1.42 percent, to 1,661.51 and the Nasdaq Composite
dropped 59.535 points, or 1.62 percent, to 3,609.738.
The S&P 500 index's 1.4 percent drop was its biggest decline
since June 20.
Trading volume was low, as it tends to be in August, and
will likely remain lackluster as earnings season winds down.
The technology sector was the biggest laggard on the S&P
500, weighed down heavily by Cisco Systems, which fell
6.9 percent to $24.55 as a slew of brokerages cut their price
targets on the stock. The network equipment maker said recently
it will cut 4,000 jobs, or 5 percent of its workforce.
Shares of smaller rivals Ciena Corp and F5 Networks
were also down. Ciena fell 4.7 percent
to $21.43 while F5 Network slipped 2.9 percent to $89.83.
One of the few bright spots in retail earnings was Kohl's
, which reported a rise in quarterly same-store sales,
sending its stock up 5 percent to $53.45.
Billionaire investor George Soros added another 2 million
shares to his stake in struggling retailer J.C. Penney,
regulatory filings showed. The retailer's stock
was up 4.5 percent at $13.70.
Meanwhile, Warren Buffett's Berkshire Hathaway shed
its stake in newspaper and broadcasting company Gannett Co Inc
, which sent shares of Gannett down 4.9 percent to
Gun maker Smith & Wesson Holding's shares dropped
7.9 percent to $11.22 after a KeyBanc analyst downgraded the
stock to "underweight" from "hold," citing recent its recent
outperformance, coupled with lower retail demand.