Stocks Drop as Fed Hints at End of Stimulus

Tickers in this article: DIS IBM TWX Z

NEW YORK (TheStreet) -- U.S. stocks fell Wednesday, continuing a modest pullback, amid speculation the Federal Reserve may finally begin winding down its contentious yet arguably successful $85 billion a month bond-purchasing program as early as next month.

The S&P 500 fell 0.4% to 1,690.91 while the Dow Jones Industrial Average slipped 0.3% to 15,472.86. The Nasdaq was losing 0.3% to 3,654.01.

Investors exhibited caution on Wednesday following declarations a day earlier from Chicago Fed President Charles Evans, one of the most aggressive supporters of the Fed's massive stimulus program, and Atlanta Fed Bank President Dennis Lockhart, that the central bank could begin tapering its bond-buying program as early as September, though this wasn't set it stone. Both were quick to add that job growth numbers would be watched closely to determine whether a pullback would be in order.

Investor sentiment was further eroded when IBM said it plans to furlough the majority of its U.S. employees in its hardware unit, according to several reports. Employees will be required to take a week off at one-third pay beginning either Aug. 24 or Aug. 31. That sounds more like Greece than the world's foremost provider of computer services.

IBM was fell 0.8% to $188.56 a day after the shares were downgraded by Credit Suisse.

Walt Disney uncharacteristically tumbled following an earnings report after the world's largest entertainment company said it expects to incur a fourth-quarter loss of $160 million to $190 million on The Lone Ranger. Disney lost 1.7% to $65.91.

Ralph Lauren tumbled 8.6% to $173.13 as the high-end retailer of branded clothing indicated profit for the second-quarter would fall short of analysts' forecasts. Retailers Slide First Solar plunged 13% to $40.47 as the largest U.S. solar-panel maker said profit missed Wall Street projections.

Written by Leon Lazaroff in New York

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