Closing Bell: Stocks End Lower for Third Straight Session on Fed Fears

Sandra Pianalto Federal Reserve Bank Cleveland stimulus stocks economy
Jay LaPrete/Bloomberg via Getty ImagesFederal Reserve Bank of Cleveland President Sandra Pianalto

Stocks fell for a third straight day Wednesday after several companies released weak earnings reports, and amid growing uncertainty about when the Federal Reserve will begin to wind down its stimulus, which has helped propel stocks to record highs this year.

In the latest comment from Fed officials, Federal Reserve Bank of Cleveland President Sandra Pianalto said the central bank would be prepared to scale back asset purchases if the labor market remains on the stronger path followed since last fall.

The Dow Jones industrial average (^DJI) lost 48 points to close at 15,470, the Standard & Poor's 500 index (^GPSC) fell 6 points to 1,690 and the Nasdaq composite index (^IXIC) slipped 11 points to 3,654.

Walt Disney was among the biggest drags on blue chip stocks. Shares of Disney (DIS) fell 1.7 percent to $65.91 after projecting a massive loss related to its film "The Lone Ranger" on Tuesday, though adjusted earnings slightly beat expectations.

In separate lawsuits filed Tuesday, the Justice Department and the Securities and Exchange Commission said Bank of America (BAC) failed to tell investors about the risks involved in a 2008 sale of mortgage-backed bonds. Bank of America, the country's second-largest bank, slipped 11 cents Wednesday, to end at $14.53.

In automotive news, Chrysler said it plans to hire 300 workers at two Michigan engine plants to build the company's Tigershark engines, used in the Dodge Dart compact and likely to power new Chrysler cars in the future. The automaker, which is majority-owned by Italy's Fiat, will spend $52 million for the plant upgrades, which are scheduled to be completed by the end of the current quarter.

Also, Ford (F) said that even though it's having difficulty supplying dealers with some of its more popular models, it isn't planning to build any new factories. The automaker's North America manufacturing chief, Jim Tetreault, says his mandate is to squeeze more production out of existing plants to avoid the high cost of new bricks and mortar. Some plants are operating near capacity.

U.S. consumer credit rose less than expected in June, held back by the largest decline in credit card use in a year as households continue to pay down debts. Total consumer installment credit increased by $13.8 billion to $2.8 trillion, Federal Reserve data released Wednesday showed.

An uncertain economy and new financial pressures are expected to temper retail sales for the back-to-school season for many major retailers, a Citi analyst said. Shares of major retailers were mostly down for the day, along with the broader markets. Here's how some fared:

  • American Eagle Outfitters (AEO) shares fell 3.8 percent, to $16.90.

  • Macy's (M) shares fell 61 cents to reach $47.83

  • Target (TGT) stock slipped 11 cents to $71.68.

  • Walmart Stores (WMT) shares dropped 3 cents to $77.37.

  • J.C. Penney (JCP) fell 3.6 percent to reach $12.80.

  • Kohl's (KSS) shares fell more than 1 percent to $50.96.

More Stocks in the News:

  • Ralph Lauren Corp. (RL) slumped 8.6 percent, to $173.13. Sluggish sales led the luxury retailer to report a drop in quarterly income early Wednesday. The company also gave a cautious sales forecast.

  • First Solar (FSLR) plunged more than 13 percent to $40.47. The company posted results late Tuesday that fell short of Wall Street expectations and cut its profit outlook.

  • Zillow (Z), which operates a real-estate website, took a 7.7 percent hit, falling to $83.73. After the market closed Tuesday, the company reported a loss in the second quarter as its costs nearly doubled.

  • Toyota Motor (TM) said it is recalling 342,000 Tacoma midsize pickup trucks to fix a problem with the seat belts. The recall affects Access Cab models made from 2004 to 2011. In trading Wednesday, Toyota shares dipped 1.6 percent to $127.56.

What to Watch Thursday:

  • Selected chain retailers release July sales.

  • The Labor Department releases weekly jobless claims at 8:30 a.m. Eastern time.

  • Freddie Mac releases weekly mortgage rates at 10 a.m.

These major companies are scheduled to report quarterly earnings

  • Apollo Group (APOL)

  • Cooper Tire (CTB)

  • Dean Foods (DF)

  • MBIA (MBI)

  • (PCLN)

  • T-Mobile US (TMUS)

  • Visteon (VC)

-Compiled from staff and wire reports.