US STOCKS-Wall St drops for third session on Fed concerns
* Officials' remarks raise concern over stimulus pullback
* S&P 500 falls under its 14-day moving average
* Walt Disney falls after results, Time Warner rises
* Indexes down: Dow 0.5 pct; S&P 0.6 pct; Nasdaq 0.8 pct
NEW YORK, Aug 7 (Reuters) - U.S. stocks fell for a third day on Wednesday on growing concerns over the longevity of the Federal Reserve's stimulus policy, which has been widely credited with fueling the market's gains this year.
Even after shares suffered their biggest decline since June 24 on Tuesday, the market was unable to shake off comments from a pair of Fed officials on Tuesday that muddied the water over how soon the central bank might reduce its bond-buying program.
The S&P 500 broke below 1,693.95 on Wednesday, its 14-day moving average that had served as a support level. Although the broad market index is down about 1.4 percent for the week, it is still up more than 18 percent this year.
"The risk reward is not as same as it used to be for the market. It used to be that people were anticipating economic recovery and knew the rates would stay low. Rates are more competitive now, and it takes real earnings growth to back stocks at these levels," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.
"With earnings almost over, we aren't left with bellwether stock stories that prevent some level of profit-taking."
Walt Disney Co was among the top decliners on the blue chip Dow Jones industrial average index. The stock fell 2.6 percent to $65.31 after projecting a massive loss related to its film, "The Lone Ranger," on Tuesday, though adjusted earnings slightly beat expectations.
The Dow Jones industrial average was down 81.82 points, or 0.53 percent, at 15,436.92. The Standard & Poor's 500 Index was down 10.57 points, or 0.62 percent, at 1,686.80. The Nasdaq Composite Index was down 27.45 points, or 0.75 percent, at 3,638.32.
Time Warner Inc shares rose 2.2 percent to $65.51 after the company reported a bigger revenue than had been forecast. AOL Inc rose 2.7 percent to $37.13 after it reported results and said it would buy Adap.tv, a video ad platform, for $405 million.
On the downside, First Solar Inc fell 13.6 percent to $40.41 after it reported results Tuesday that were below expectations and cut its full-year outlook.
Ralph Lauren Corp fell 6.2 percent to $177.77 as profits declined. Both companies were among the S&P 500's biggest percentage decliners.
LINKED TO POLICY
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.
The market will be watching for comments from Fed Bank of Cleveland President Sandra Pianalto, who is scheduled to speak at around 1:40 p.m. EDT (1740 GMT).
Chicago Fed President Charles Evans said Tuesday the Fed would probably scale back its bond-buying program 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 program if growth doesn't meet its targets.
Through Tuesday morning, of the 418 companies in the S&P 500 that had reported earnings, Thomson Reuters data showed that 67.5 percent topped analysts' expectations, in line with the average beat over the past four quarters. On the revenue side, 54 percent have reported revenue above estimates, more than in the past four quarters, but below the historical average.