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Stocks fall on Fed concerns amid corporate earnings reports

Stocks fell, following the biggest drop since November for the Standard & Poor’s 500 Index, as concern grew that the U.S. Federal Reserve may slow the pace of stimulus and investors weighed corporate earnings.

VeriFone Systems Inc. (NYSE: PAY) lost 43 percent after the maker of credit-card terminals forecast second-quarter profit that missed analysts’ estimates because of weak economic conditions in Europe. Wal-Mart Stores Inc. (NYSE: WMT) rose 1.5 percent as the world’s biggest retailer reported earnings that topped forecasts. Hewlett-Packard Co. (NYSE: HPQ) rallied 6.7 percent after regular trading as its outlook exceeded estimates.

The S&P 500 fell 0.6 percent, or 9.53 points, to 1,502.42. The benchmark index lost 1.2 percent Wednesday amid concern that the Fed will scale back economic stimulus. The Dow Jones Industrial Average dropped 46.92 points, or 0.3 percent, to 13,880.62 Thursday. About 7.7 billion shares exchanged hands on U.S. exchanges, 25 percent above the three-month average.

“The timeliness of the Fed’s comments coming out took a little bit of the excess out of the stock market,” Tim Hartzell, who helps manage about $400 million as chief investment officer at Sequent Asset Management in Houston, said in a phone interview. “Equities really had gotten ahead of itself with just the belief that there’s always going to be $85 billion come into the market from the Fed.”

Several participants at the Federal Open Market Committee’s Jan. 29-30 meeting said the central bank should be ready to vary the pace of its $85 billion in monthly bond purchases, minutes from the meeting showed Wednesday, spurring concern stimulus will be curtailed.

Jobless claims increased by 20,000 to 362,000 in the week ended Feb. 16, the Labor Department reported Thursday in Washington. Among other economic data, the index of U.S. leading indicators rose for a second month in January, climbing 0.2 percent. Purchases of existing houses, tabulated when a contract closes, increased 0.4 percent to a 4.92 million annual rate.

Bank of America Corp. (NYSE: BAC) tumbled 3.2 percent to $11.42 for the biggest drop in the Dow. Caterpillar Inc. (NYSE: CAT) sank 1.8 percent to $91.53. Home Depot Inc. (NYSE: HD) lost 3.1 percent to $64.38.

Semiconductors performed the worst among 24 groups in the S&P 500, slipping 2 percent. Advanced Micro Devices Inc. (NYSE: AMD) dropped 3.7 percent to $2.60. Micron Technology Inc. (Nasdaq: MU) slid 2.5 percent to $7.68, and Intel Corp. (Nasdaq: INTC) fell 2.3 percent to $20.25.

Tesla Motors Inc. (Nasdaq: TSLA) dropped 8.8 percent to $35.16. The maker of electric cars headed by billionaire Elon Musk reported a fourth-quarter loss that was larger than analysts expected, blaming a jump in operating costs during the start of production.

PG&E Corp. (NYSE: PCG), the owner of California’s largest utility, dropped 4 percent to $41.41. The company fell the most since August 2011 after forecasting 2013 earnings below the average analyst estimate.

Carlyle Group LP (Nasdaq: CG) tumbled 7.8 percent to $33.80, the most since going public in May. Wash.-based Carlyle, the most active U.S. private-equity buyer in 2012, reported fourth-quarter profit that fell short of analysts’ estimates as the firm’s fund holdings appreciated at a slower pace.

Boeing Co. (NYSE: BA) rallied 1.6 percent to $76.01. The Chicago-based company will present a battery redesign for the 787 Dreamliner Friday in a bid to satisfy regulators’ safety concerns and get the jet back into the air within weeks, people with knowledge of the proposal said.

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