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Stocks slip; US growth raises fear of Fed pullback
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Stocks pulled back from record levels yesterday as investors bet that faster growth in the US would increase the likelihood that the Federal Reserve would slow down its economic stimulus program.
The US economy expanded at an annual rate of 2.8 percent in the third quarter, up from 2.5 percent in the previous quarter. That made investors think the Fed could start cutting back its stimulus next month, earlier than many anticipated.
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 US$85 billion of bonds a month to hold down interest rates and encourage hiring and borrowing. That has helped drive US stock markets to record levels.
Twitter soared in its market debut. The stock was trading at US$45.74, up 76 percent from its initial offering price of US$26 a share.
The Dow Jones industrial average was down 27 points, or 0.2 percent, at 15,719 as of noon Eastern time (1700 GMT). It was up as much as 50 points in early trading.
The Standard & Poor's 500 index fell eight points, 0.5 percent, to 1,762. The Nasdaq composite lost 41 points, or 1.1 percent, to 3,890.
In government bond trading, the yield on the 10-year Treasury note fell to 2.61 percent from 2.64 percent a day earlier.
Oil fell 51 cents to US$94.29 a barrel. The price of gold dropped US$7.90 to US$1,309 an ounce.
Among other stocks making big moves:
— J.C. Penney rose 35 cents, or 4.7 percent, to US$8.06. 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 60 percent this year.
— Whole Foods Market plunged US$6.02, or 9.4 percent, to US$58.45 after the company cut its outlook for sales growth and earnings for its next fiscal year.
— Qualcomm fell US$2.46, or 3.5 percent, to US$67.28 after the chip maker's earnings fell short of Wall Street's forecast.
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