Wall Street down 1 percent, Dow and S&P slip into red for the year

By Tanya Agrawal

REUTERS - Wall Street fell more than 1 percent on Thursday morning, pushing the Dow and the S&P into the red for the year, after the Federal Reserve highlighted global growth concerns and as Walt Disney dragged down consumer discretionary stocks.

The Dow Jones industrial average fell to a more than six-month low, while the Nasdaq composite and the S&P 500 fell to their lowest in more than a month.

The Fed, in minutes of its latest meeting released on Wednesday, continued to express broad concerns about lagging inflation even as the job market improved further. The comments led traders to scale back bets that rates would be raised in September.

"Today's movement is an illustration of a dramatic shift in sentiment," said Tom Digenan, head of U.S. equities at UBS Global Asset Management.

"The Fed minutes certainly added to the fear factor. Any negative or even neutral news adds to it. Neutral is the new negative in this environment."

At 11:27 a.m. ET (1527 GMT) the Dow Jones industrial average was down 186.67 points, or 1.08 percent, at 17,162.06.

The S&P 500 was down 21.56 points, or 1.04 percent, at 2,058.05 and the Nasdaq composite was down 81.23 points, or 1.62 percent, at 4,937.83.

Nine of the 10 major S&P sectors were lower, with five of the 10 down more than 1 percent. The consumer discretionary index's 1.9 percent fall led the decliners.

Utilities stocks, sought by investors when Treasuries yields are seen remaining lower for longer, sharply outperformed the benchmark index with a 0.34 percent gain.

Disney fell 4.8 percent to $101.39 and Time Warner fell 3.6 percent to $75.03 after Bernstein downgraded the two stocks. Disney was the biggest drag on the Dow Jones industrial average and the consumer discretionary index.

Another drag on the consumer index was Netflix. The stock fell more than 8 percent to $112.03 in its steepest intraday decline since mid-October.

Apple fell 1.3 percent, weighing the most on the Nasdaq and the S&P, after a Gartner report that said China smartphone sales fell for the first time ever in the second quarter. Apple counts China as a key growth market.

Apple also dragged on the S&P tech index, which moved into negative territory for the year after its 1.77 percent decline.

The finance index also moved into negative territory for the year, after falling 1.45 percent on speculation that the Fed would not raise interest rates in September.

NetApp rose 5.3 percent to $31.36 after the data storage equipment maker's results beat expectations.

Declining issues outnumbered advancing ones on the NYSE by 2,263 to 637. On the Nasdaq, 2,078 issues fell and 604 advanced.

The S&P 500 index showed three new 52-week highs and 28 new lows, while the Nasdaq recorded 13 new highs and 133 new lows.

(Reporting by Tanya Agrawal in Bengaluru; Editing by Savio D'Souza)