* Shares tumble after Fed chief signals stimulus could be
* Fed maintains pace of bond purchases for the present
* REITs slump after Bernanke comments
* Adobe, FedEx rise after results; Sprint tumbles
* Indexes off: Dow 1.3 pct, S&P 500 1.4 pct, Nasdaq 1.1 pct
By Ryan Vlastelica
NEW YORK, June 19 (Reuters) - U.S. stocks fell more than 1
percent on Wednesday after Federal Reserve Chairman Ben Bernanke
said the central bank would start to reduce its stimulus
measures later this year if the economy is strong enough.
Equities have been closely tethered to ultra-loose monetary
policy, which has been key to the S&P's climb of more than 14
percent so far this year. Benchmark 10-year U.S. bond yields
jumped to a 15-month high on expectations the Fed will reduce
its bond buying.
Bernanke said at a news conference the Fed may reduce its
bond-buying program with the goal of ending in mid-2014. While
investors have expected the Fed to pull back on its stimulus,
Bernanke's comments gave the most explicit timeline to markets,
causing stocks to tumble on heavy volume. In the days leading up
to the Fed announcement, stocks had swung between modest losses
"I was surprised he addressed the issue of tapering, since
last time he did we saw a fairly significant market hiccup,"
said Randy Bateman, chief investment officer of Huntington Asset
Management in Columbus, Ohio.
The Dow Jones industrial average was down 205.96
points, or 1.34 percent, at 15,112.27. The Standard & Poor's 500
Index was down 22.89 points, or 1.39 percent, at
1,628.92. The Nasdaq Composite Index was down 38.98
points, or 1.12 percent, at 3,443.20.
Shortly before Bernanke spoke at a news conference, Fed
policymakers said in a statement the Fed would keep buying $85
billion in bonds per month and gave no explicit indication that
it was close to scaling back the stimulus program.
About 6.65 billion shares changed hands on the New York
Stock Exchange, the Nasdaq and NYSE MKT, above the daily average
so far this year of about 6.36 billion shares.
"If the economic growth we have is sustainable without the
Fed, that's good news," added Bateman, who helps oversee $15
billion. "But it is hard to wean the system off the easy money."
The benchmark 10-year U.S. Treasury note fell 1
9/32, with the yield at 2.3325 percent.
The S&P 500 has rose for the two days before the Fed
decision on confidence that current stimulus would be left in
place even if Bernanke nods at the need to begin reducing bond
purchases later in the year.
The stimulus helped the stock market reach a record high on
May 21, one day before Bernanke said the Fed could reduce its
bond-buying in the "next few meetings" if the economy gained
momentum. His comments rocked markets, boosting bond yields and
halting stocks' rally.
Despite the increased volatility of the past month, the
market has moved largely sideways. The S&P 500 is about 2.4
percent below its record high of 1,669.16, reached May 21.
More than four-fifths of stocks traded on the New York Stock
Exchange fell while 70 percent of Nasdaq-listed shares ended
Real estate investment trusts, whose chunky dividends
attracted investors during the low interest-rate period, were
among the hardest hit on Wednesday. The benchmark MSCI US REIT
index was down 3.1 percent, with Pennsylvania Real Estate
Investment Trust off 2 percent to $19.19 and Simon
Property Group down 2.9 percent to $162.52.
REITs are exempt from corporate-level income tax if the
companyies distribute at least 90 percent of their taxable
income in the form of dividends to shareholders. Since Bernanke
began signaling the possible end of the policy, the index is
down 12 percent.
Shares of Adobe Systems Inc rose 5.6 percent to
$45.78 a day after the maker of Photoshop and Acrobat software
reported a higher-than-expected adjusted quarterly profit.
FedEx Corp reported higher quarterly profit than
expected as its ground shipment business improved. Shares were
up 1.1 percent at $100.54.
After the market closed, Jabil Circuit Inc fell 1.6
percent in extended trading after it reported results while
Micron Technology Inc lost 1.3 percent. Red Hat Inc
rose 2.4 percent after its results.
On the downside, Sprint Nextel was both the most
heavily traded stock on the New York Stock Exchange and one of
the biggest decliners on the S&P 500, down 4.4 percent to $7.
Japan's SoftBank cleared a major hurdle in its
attempt to buy Sprint as rival bidder Dish Network
declined to make a new offer after SoftBank sweetened its own
bid last week.