Stocks fell in early trading Wednesday as investors weighed signs of an improving economy against the prospect of the Federal Reserve cutting back on its economic stimulus.
Chegg, an online textbook rental company, flopped in its stock market debut, and clothing maker Perry Ellis plunged after cutting its revenue forecast because of weak sales. Macy's rose after beating analysts' earnings estimates.
The Federal Reserve is buying $85 billion of bonds a month to keep interest rates low and support the economy, helping drive a rally in stocks this year that has pushed stock indexes to record highs. Surprisingly strong reports on economic growth and hiring last week have led investors to speculate that the Fed may pare back their stimulus sooner than expected.
Investors will follow Thursday's confirmation hearing for Janet Yellen, who has been nominated to succeed Fed Chairman Ben Bernanke for clues about when the Fed may begin to scale back its economic stimulus.
The Standard & Poor's 500 index dropped three points, or 0.2 percent, to 1,764 in early trading. The Dow Jones industrial average fell 74 points, or 0.5 percent, to 15,677. The Nasdaq composite fell three points, or 0.1 percent, to 3,916.
The losses were broad. Eight of the 10 industry groups in the S&P 500 fell. Telecommunications stocks fell the most, 0.7 percent.
The stocks of consumer companies got a lift from Macy's. The department store chain reported a profit that handily beating Wall Street expectations after it boosted its advertising. Macy's jumped $3.64, or 7.8 percent, to $49.95.
In government bond trading, the yield on the 10-year Treasury note fell to 2.73 percent from 2.77 percent yesterday.
In commodities trading, the price of oil rebounded after a slump on Tuesday. The price of oil rose $68 cents, or 0.7 percent, to $93.71 a barrel. Gold gained $3, or 0.2 percent, to $1,273.70 an ounce.
Among other stocks making big moves:
—Chegg, one of the first technology stocks to go public since Twitter's hotly anticipated IPO last week, dropped $1.71, or 14 percent, to $10.79 on its first day of trading. Perry Ellis plunged $4.25, or 22 percent, to $15.22.
— Potbelly Corp. rose $4.52, or 16.6 percent, to $31.55, after its third-quarter adjusted earnings came in ahead of market expectations. It was the company's first quarter as a publicly traded company.
— Starbucks fell 44 cents, or 0.6 percent, to $80.14 after the company said late Wednesday that an arbitrator has concluded that it must pay $2.8 billion to Mondelez International to settle a dispute over coffee distribution.
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Original headline: US stocks drop in early trading on Wall Street
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