NEW YORK, Aug 7 — Major stock indices fell for a third straight day today, as concerns grew over the longevity of the Federal Reserve’s stimulus policy, which has been widely credited with fuelling the market’s gains this year.

In the sessions preceding recent comments by Fed officials, equities had struggled for direction in thin trading, with major indices hovering near all-time highs and few clear catalysts to drive shares decisively higher.

Today, the S&P broke below 1,693.95, its 14-day moving average, which had been serving as a support level.

“We’re still only a few points under our all-time high, so it isn’t surprising to see people take profits in a somewhat frothy market,” said Randy Frederick, managing director of active trading for Charles Schwab in Austin, Texas.

“At these levels, there’s plenty of room to the downside before there’s reason to be concerned.”

Shares yesterday suffered their biggest daily decline since June 24 after comments from two Fed officials muddied the water over how soon the central bank might reduce its bond-buying programme.

Chicago Fed President Charles Evans said yesterday the Fed would probably scale back its bond-buying programme later this year, perhaps beginning to do so as early as next month depending on economic data.

That echoed earlier comments by Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, though he told Market News International the Fed might continue its stimulus programme if growth did not meet its targets.

“The comments weren’t especially out of the ordinary, but there’s not much for the market to be trading off of otherwise,” said Frederick.

Testing times on the floor of the New York Stock Exchange. — Reuters pic

Equity markets have been closely tethered to central bank policy, with many investors concerned that economic growth isn’t robust enough to boost markets without the Fed’s help. Last week, the July payroll report came in much weaker than expected.

Walt Disney Co fell 3 per cent to US$65.04 a day after projecting a massive loss related to its film, “The Lone Ranger”, though adjusted earnings slightly beat expectations.

The Dow Jones industrial average was down 62.12 points, or 0.40 per cent, at 15,456.62. The Standard & Poor’s 500 Index was down 6.79 points, or 0.40 per cent, at 1,690.58. The Nasdaq Composite Index was down 10.48 points, or 0.29 per cent, at 3,655.29.

Time Warner Inc shares rose 2.6 per cent to US$66.65 after the company reported a bigger revenue than had been forecast. AOL Inc rose 2.7 per cent to US$37.21 after it reported results and said it would buy Adap.tv, a video ad platform, for US$405 million.

On the downside, First Solar Inc fell 10 per cent to US$41.90 after it reported results yesterday that were below expectations and cut its full-year outlook. Ralph Lauren Corp fell 6.2 per cent to US$177.77 as profits declined. Both companies were among the S&P 500’s biggest percentage decliners.

Of the 418 companies in the S&P 500 that have reported earnings through yesterday morning, Thomson Reuters data showed that 67.5 per cent topped analysts’ expectations, in line with the average beat over the past four quarters. On the revenue side, 54 per cent have reported revenue above estimates, more than in the past four quarters but below the historical average. — Reuters