News Column

U.S. Growth Prompts Fed Rethink

November 7, 2013

Steve Rothwell, AP Markets Writer

stock traders
Stocks fell Thursday despite Twitter's roaring debut (AP)

NEW YORK (AP) Stocks held near record highs in early trading Thursday amid excitement over Twitter's market debut and after U.S. economic growth accelerated in the third quarter to the fastest pace in a year.

The U.S. economy expanded at an annual rate of 2.8 percent from July through September, rising from a 2.5 percent annual rate in the second quarter. The growth was nearly a full percentage point stronger than most economists had predicted.

Investors were also watching for the start of trading in Twitter, the most anticipated initial public offering since Facebook came to the market. The online messaging service priced its stock at $26 a share, valuing the company at more than $18 billion.

European markets rose after the European Central Bank cut its benchmark lending rate to a record low 0.25 percent from 0.5 percent.

U.S. stocks are trading at record levels as global central banks, led by the Federal Reserve, continue with unprecedented stimulus efforts to revive economic growth. The Fed is currently buying $85 billion of bonds every month to keep long-term interest rates low.

The Dow Jones industrial average gained 23 points, or 0.1 percent, or 15,769 after the first half-hour of trading Thursday.

The Standard & Poor's 500 index fell less than a point to 1,769. The Nasdaq composite edged down 11 points, or 0.3 percent, to 3,920.

In government bond trading, the yield on the 10-year government note fell to 2.63 percent from 2.64 percent a day earlier.

In commodities trading, oil fell 45 cents, or 0.5 percent, to $94.34 a barrel. The price of gold dropped $10.60, or 0.8 percent, or $1,307 an ounce. The dollar rose against the euro to $1.33 after the ECB cut its lending rate. The U.S. currency also advanced against the yen.

Among other stocks making big moves:

J.C. Penney rose 51 cents, or 6.5 percent, to $8.20 after the company said that a key sales barometer rose in October for the first time in nearly two years, a sign shoppers are returning to the department store brands that have been brought back to its shelves. The company's stock is still down 60 percent this year.

Whole Foods Market plunged $6.89, or 9.9 percent, to $58.05 after the company cut its outlook for sales growth and earnings for its next fiscal year.

Qualcomm fell $2.91, or 4.2 percent, to $66.82 after the chip maker's earnings fell short of Wall Street's forecast, as did its outlook for the current period.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



Source: Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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