* Caterpillar drags Dow after reporting sales
* Trading volume heavier than normal on quadruple witching
* FireEye, Rocket Fuel shares soar in trading debut
* Dow off 0.71 pct; S&P off 0.56 pct; Nasdaq off 0.24 pct
By Chuck Mikolajczak
NEW YORK, Sept 20 (Reuters) - U.S. stocks dipped on Friday
as investors grappled with comments by Federal Reserve officials
in the wake of the central bank's decision not to trim its
stimulus, but two companies made initial public offerings with
St. Louis Federal Reserve Bank President James Bullard,
interviewed by Bloomberg TV, said a reduction of the Fed's $85
billion monthly bond purchase program beginning in October was
On Wednesday, the Fed surprised economists and investors
with its decision to delay scaling back its stimulus.
Bullard also said in a speech in New York later that low
inflation meant the Fed can be patient in deciding when to scale
back its pace of asset purchases.
"The fact of the matter is they (the Fed) basically had a
'freebie.' The markets had already adjusted for all this. They
(the Fed) would be able to take the first step in doing some
tapering," said Stephen Massocca, managing director at Wedbush
Equity Management LLC in San Francisco.
"The market will view this as a bad move on their part, and
we are already seeing that today. It is also a reflection on
what the Fed didn't do and some disappointment with that."
Kansas City Federal Reserve Bank President Esther George
told the Shadow Open Market Committee in New York that the
central bank needs to move away from the bond-buying policy and
called the decision not to taper disappointing.
Even with the indexes declining, new stock offerings by
cybersecurity company FireEye Inc and advertisement
technology company Rocket Fuel Inc managed to debut
with spectacular results.
FireEye shares opened 101.5 percent above the initial public
offering price at $40.30 and last traded up 87.8 percent to
$37.56. Rocket Fuel also more than doubled in its trading debut,
and recently traded up 91.4 percent to $55.52.
The Dow Jones industrial average fell 110.32 points
or 0.71 percent, to 15,526.23, the S&P 500 lost 9.61
points or 0.56 percent, to 1,712.73 and the Nasdaq Composite
dropped 9.017 points or 0.24 percent, to 3,780.367.
Trading volume was heavier than usual as Friday marks the
"quadruple witching," when stock index futures, stock index
options, stock options and single stock futures all expire on
the same day. Trading increases as investors replace or
repurchase existing contracts.
In addition to the quadruple witching, all three major U.S.
stock indexes, as well as the FTSE and U.S. index trackers, will
rebalance their portfolios to match revisions to index weights.
This happens at the close of trading, which could push trading
volume higher as transactions jump at the exact close.
"Since the largest of these products which are index futures
and options expire on the open, the effect is most pronounced at
the open. However, with stock and ETF expirations, as well as
index rebalancing, occurring at the close, there can also be
significant impact on the close," said Ana Avramovic,
derivatives Strategist at Credit Suisse in New York, in a note
Caterpillar Inc was the biggest drag on the Dow,
down 2.5 percent to $85.59 after the maker of heavy machinery
reported sales for the three-month rolling period ending in
Apple Inc, which rose 0.6 percent to $474.91,
helped curb declines on the Nasdaq as the company's latest
version of its iPhone product line hit stores around the world.
The Dow industrials and the S&P 500 index were on track to
show a gain for the week, aided by a rally on Wednesday that
took both indexes to record highs after the Fed's decision.