Stocks fall to 7-week low as Fed reports high unemployment

Stock prices continued to lose ground on Wednesday after the Federal Reserve reported the economy continues to show signs of modest growth but is still plagued by high unemployment.

The Dow Jones Industrial Average fell for the fourth time in the past five sessions, down 25.19 points to 13,077.34. The Nasdaq Composite Index fell 8.77 points to 2,981.70, and the S&P 500 Stock Index declined 4.36 points to 1,408.75.

The Fed said it will maintain its low interest rate policy until at least mid-2015 as longer-term inflation expectations remain stable. However, "Household spending has advanced a bit more quickly, but growth in business fixed investment has slowed," according to a statement issued by the Open Market Committee.

Oil prices fell for the fifth consecutive session on Wednesday. Crude closed at $85.73 a barrel, down 94 cents. Gold also fell, down $7.80 to $1,701.60 an ounce.

Netflix Inc. (Nasdaq: NFLX) plunged 12 percent after the world’s largest online video service cut its forecast for domestic growth. D.R. Horton Inc. (NYSE: DHI) and Toll Brothers Inc. (NYSE: TOL) added at least 1.5 percent to pace gains in homebuilders. Facebook Inc. (Nasdaq: FB), the world’s biggest social networking site, surged 19 percent after reporting sales that topped analysts’ projections.

“It’s been a pretty lackluster market,” said Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Ala. “There’s nothing new or encouraging in terms of the Fed’s outlook regarding the economy. In addition to that, top line growth of companies has been disappointing.”

Forty-four companies in the S&P 500 were scheduled to release results Wednesday. Earnings at about 69 percent of the index’s companies beat analysts’ estimates, according to data compiled by Bloomberg. Third-quarter sales missed forecasts at 60 percent of companies, according to data compiled by Bloomberg, the data showed.

Altera Corp. (Nasdaq: ALTR) retreated 8.4 percent to $29.89. Two customers are switching away from Altera’s processors to alternatives, the company said on a conference call with analysts Tuesday. That’s taking a bite out of fourth-quarter revenue. One of the customers is Huawei Technologies Co., China’s biggest maker of telecommunications-network equipment, representing $150 million in lost sales, according to a report by Chris Danely, an analyst at JPMorgan Chase & Co. (NYSE: JPM).

IAC/InterActiveCorp (Nasdaq: IACI) slid 8.4 percent to $48. The company founded by Barry Diller forecast a 2013 operating loss for units that include Newsweek, which it plans to convert to an online- only publication after 80 years of print.

Eli Lilly & Co. (NYSE: LLY) lost 2.7 percent to $50.50 after reporting third-quarter earnings that missed analyst estimates after generic competition reduced revenue from the schizophrenia treatment Zyprexa, once the company’s top-selling drug.

Tempur-Pedic International Inc. (NYSE: TPX) plunged 19 percent to $25.66. The mattress maker acquiring rival Sealy Corp. (NYSE: ZZ) cut its 2012 profit forecast amid increased U.S. competition and weakening sales in Europe.

Brinker International Inc. (NYSE: EAT) sank 10 percent to $30.01. The owner of the Chili’s and Maggiano’s dining chains forecast profit that was less than analysts estimated.

Dow Chemical Co. (NYSE: DOW) climbed 4.7 percent to $29.88. The chemical producer eliminating 2,400 jobs to cope with a slowing economy reported better-than-expected earnings as volumes rose and plastics output benefited from low-cost natural gas.

Lockheed Martin Corp. (NYSE: LMT) increased 2.1 percent to $93.92. The world’s largest defense contractor said third-quarter profit rose 9.3 percent and raised its full-year earnings forecast. The company also projected a decline in 2013 sales.

US Airways Group Inc. (NYSE:LCC) jumped 2.3 percent to $12.37. The carrier that wants to merge with American Airlines said third-quarter profit more than doubled as passenger traffic increased and the price it paid for jet fuel declined.

Molina Healthcare Inc. (NYSE: MOH) rallied 14 percent to $25.81. The insurer specializing in Medicaid plans for the poor reported a profit on improved results from its biggest market.