Stocks slip; US growth raises fear of Fed pullback

NEW YORK (AP) -- The stock market retreated from record levels Thursday as traders 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 growth estimate. 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 $85 billion of bonds every month to hold down interest rates and encourage hiring and borrowing. The program has had a secondary effect in helping boost stock prices, because the program makes bonds more expensive by comparison.

The Dow Jones industrial average was down 113 points, or 0.7 percent, at 15,634 as of 2:10 p.m. Eastern time. It closed at an all-time high of 15,746.88 on Wednesday.

The Standard & Poor's 500 index fell 18 points, 0.5 percent, to 1,752. The Nasdaq composite lost 58 points, or 1.5 percent, to 3,874.

Twitter soared in its market debut. The stock traded at $46.51, up $20.46, or 79 percent, from its $26 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 chief investment officer 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."

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

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.

Among other stocks making big moves:

— J.C. Penney rose 53 cents, or 7 percent, to $8.23. 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 $6.12, or 9.5 percent, to $58.36 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.