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The Twitter bird logo is on an updated phone post on the floor of the New York Stock Exchange, Wednesday Nov. 6, 2013. Twitter's initial public offering was priced at $26 a share, Wednesday evening, and is expected to start trading on the New York Stock Exchange on Thursday. (AP Photo/Richard Drew)
Stocks slip; US growth raises fear of Fed pullback
First Published Nov 07 2013 08:13 am • Last Updated Nov 07 2013 11:38 am

New York » The stock market retreated from record levels Thursday as investors interpreted faster growth in the U.S. economy as a sign the Federal Reserve could soon slow its stimulus program.

The economy expanded at an annual rate of 2.8 percent in the third quarter, up from 2.5 percent in the previous quarter, according to the government’s initial estimate of growth. That made investors think the Fed could start cutting back its stimulus next month, earlier than many anticipated.

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It "certainly raises the possibility of the Fed pulling back in December," said Peter Cardillo, chief market economist at Rockwell Global Capital. "The Fed is going to test the water."

The Fed is buying $85 billion of bonds a month to hold down interest rates and encourage hiring and borrowing. That has helped drive U.S. stock markets to record levels.

Twitter soared in its market debut. The stock traded at $45.90, up $19.90, or 77 percent, from its initial offering price.

Investors will get another important economic report on Friday, when the government publishes its monthly jobs figures for October. Economist forecast that U.S. employers added 122,000 jobs in October, down from 148,000 the month before, reflecting a 16-day partial shutdown of the federal government.

The jobs report "has people a little on edge" said Erik Davidson, deputy CIO of Wells Fargo Private Bank. "We’re expecting a modest number but it’s really hard to say what the impact of the government shutdown will be."

The Dow Jones industrial average was down 37 points, or 0.2 percent, at 15,709 as of 12:43 p.m. Eastern time. It closed at an all-time high of 15,746.88 on Wednesday.

The Standard & Poor’s 500 index fell eight points, 0.5 percent, to 1,762. The Nasdaq composite lost 39 points, or 1 percent, to 3,892.

In government bond trading, the yield on the 10-year Treasury note fell to 2.61 percent from 2.64 percent a day earlier.


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The dollar rose against the euro after Europe’s central bank cut its benchmark interest rate to a record low to help the economic recovery there. The U.S. currency also gained against the Japanese yen.

Oil fell 34 cents to $94.46 a barrel. The price of gold dropped $9.90 to $1,307 an ounce.

Among other stocks making big moves:

— J.C. Penney rose 50 cents, or 6.4 percent, to $8.20. The company said that a key sales barometer rose in October for the first time in nearly two years. The company’s stock is still down 58 percent this year.

— Whole Foods Market plunged $6, or 9.3 percent, to $58.47 after the company cut its outlook for sales growth and earnings for its next fiscal year.

— Qualcomm fell $3.20, or 4.6 percent, to $66.52 after the chip maker’s earnings fell short of Wall Street’s forecast.



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