* Alcoa's stock falls 4 pct after quarterly net loss
* Yum Brands defies China's sluggish growth, raises outlook
* True Religion exploring sale, shares jump
* Dow off 0.8 pct, S&P 500 off 0.6 pct, Nasdaq down 0.4 pct
By Atossa Araxia Abrahamian
NEW YORK, Oct 10 (Reuters) - U.S. stocks fell on Wednesday,
a day after earnings season opened with Dow component Alcoa
posting a quarterly net loss while Chevron's profit warning
dragged on the energy sector.
Shares of Alcoa slid 4.7 percent to $8.70 and weighed
on the Dow following the U.S. aluminum producer's report late
Tuesday of a quarterly net loss. Alcoa attributed the loss to a
slump in the price of aluminum and weak demand. On Wednesday, a
Nomura analyst cut the target price on Alcoa's stock to $9 from
$12, citing "continued weakness in aluminum prices" as a key
reason for the change.
Chevron Corp shares fell 4.2 percent to $112.39 and
ranked as the biggest drag on the S&P 500 after the
second-largest U.S. oil company warned that 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
An S&P energy sector index fell 1.9 percent.
The S&P 500 index is on track for its fourth day of
declines on worries that the global economic slowdown will hurt
profits more than expected. 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.
"The temptation to sell is out there," said John Brady,
managing director of R.J. O'Brien & Associates in Chicago.
"Equities have had a tremendous year, and the outlook is very
unclear. So why not reduce risk? It's hard to imagine an
additional 20 percent rally from here in the next three or four
The larger economic backdrop is also casting a shadow. The
International Monetary Fund and the World Bank recently cut
their global outlooks. And the
European debt crisis drags on.
With the latest decline, the S&P 500 broke below the
technical support level of 1,440.
"We think we will tuck under 1,400 but I'm not calling for a
wholesale sell-off," said Rick Bensignor, senior trading
strategist at Wells Fargo Securities in New York. "We're still
not far off the highs, and have not yet seen significant
distribution panic selling of stock."
The Dow Jones industrial average dropped 103.65
points, or 0.77 percent, to 13,369.88. The Standard & Poor's 500
Index fell 8.45 points, or 0.59 percent, to 1,433.03. The
Nasdaq Composite Index slipped 13.43 points, or 0.44
percent, to 3,051.59.
Although the market was down, there were some bright spots.
The stock 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 on Wednesday morning after CEO Mike
Duke said the world's largest retailer was gaining widespread
market share. The CEO also said Wal-Mart sees its international
business as a growth engine despite its decision to slow down
store openings in some key countries. At midday, Wal-Mart's
stock was up 3.4 percent at $76.68.
Warehouse chain Costco Wholesale Corp reported a 27
percent jump in quarterly profit on higher sales and membership
fees. Costco shares shot up 3.4 percent to $103.06.
True Religion Apparel Inc surged 22 percent to
$25.64 after the denim maker said it was evaluating strategic
alternatives, which could include a possible sale of the
company, after receiving indications of interest from third
On the U.S. economic front, data showed wholesale
inventories rose 0.5 percent, as expected, in August.
Investors also await the Federal Reserve's Beige Book at 2
p.m (1800 GMT) for the U.S. central bank's assessment of the
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
The cautious outlooks are the latest in a string of
forecasts from large multinational companies, including
Caterpillar Inc and Hewlett-Packard Co.