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* Alcoa's stock falls 4 pct after quarterly net loss
* Yum Brands defies China's sluggish growth, raises outlook
* Fed Beige Book indicates modest economic expansion
* Dow off 0.8 pct, S&P 500 off 0.5 pct, Nasdaq down 0.3 pct
By Atossa Araxia Abrahamian
NEW YORK, Oct 10 (Reuters) - U.S. stocks fell on Wednesday, a day after the earnings season opened with Alcoa posting a quarterly net loss and Chevron saying profits would fall sharply in its most recent period.
After hitting lows in the early afternon, stocks briefly trimmed losses after the Federal Reserve said in its Beige Book report that the economy was expanding modestly.
Shares of Alcoa slid 4.2 percent to $8.74 and weighed on the Dow industrials following the U.S. aluminum producer's report late Tuesday of a quarterly net loss, which it linked to a slump in the price of aluminum and weak demand.
Chevron Corp shares fell 4.4 percent to $112.19 and were the biggest drag on the S&P 500 after the second-largest U.S. oil company said third-quarter profits would be "substantially lower" than in the previous quarter. Chevron said a hurricane and planned maintenance had curtailed its oil and gas output, while a fire hurt its refining business.
"I think the poor earnings for the third quarter are baked into the market. If that were the only issue I think there would be limited downside," said William Delwiche, investment strategist at Robert W. Baird & Co in Milwaukee.
"But what matters now is the outlook for the fourth quarter and 2013. So far it seems to be one of more caution, and if that trend continues that could be a headwind for stocks."
The Dow Jones industrial average was down 113.56 points, or 0.84 percent, at 13,359.97. The Standard & Poor's 500 Index was down 7.52 points, or 0.52 percent, at 1,433.96. The Nasdaq Composite Index was down 10.24 points, or 0.33 percent, at 3,054.78.
The S&P energy sector index fell 1.9 percent.
The S&P 500 index was heading for its fourth day of declines on worries about deteriorating profits due to weak global demand. S&P 500 companies' third-quarter earnings are expected to fall 2.9 percent from a year ago, which would be the first decline in three years, according to Thomson Reuters data.
The Fed's Beige Book said consumer spending, prices and employment conditions have changed little since the last report in late August but that the overall economy had expanded modestly, with most districts seeing strengthened home sales in the last month.
"The Beige Book can help us trade higher once we get through this nervous period," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. "There's a lot of negative sentiment in the market after what was three, even four straight weeks of gains."
The larger economic backdrop is also casting a shadow. The International Monetary Fund and the World Bank recently cut their global outlooks as the Eurpoean debt crisis drags on.
Shares of Yum Brands Inc climbed 8 percent to $71.01 and ranked as the S&P 500's best performer. Yum, the parent company of KFC, Taco Bell and other fast-food restaurant chains, raised its full-year profit forecast after sales in China held up despite slowing growth in that market.
Shares of Wal-Mart Stores Inc, a Dow component, hit an all-time high of $76.81 after Chief Executive Officer Mike Duke said the retailer was gaining widespread market share. Wal-Mart's stock later was up 2.6 percent at $76.07.
Warehouse chain Costco Wholesale Corp reported a 27 percent jump in quarterly profit on higher sales and membership fees. Costco shares rose 3.4 percent to $103.06.
Discount chain Dollar Tree also posted a 2.5 percent gain to $46.92.
Engine maker Cummins Inc lowered its 2012 forecast for a second time this year and said it would cut up to 1,500 jobs. Cummins shares dropped 3.1 percent to $88.05.
FedEx Corp said it plans to cut costs at its underperforming express air freight and services divisions, with a goal of improving profits at those operations by $1.7 billion over the next four years. FedEx shares gained 4.7 percent to $89.57.