Renewed Fed Concerns Weighing On Wall Street - U.S. Commentary

(RTTNews) - Stocks have moved mostly lower over the course of the trading day on Thursday after failing to sustain an initial upward move. Renewed worries about the outlook for the Federal Reserve's stimulus program are weighing on the markets.

The major averages have recently climbed off their worst levels of the day but remain in the red. The Dow is down 33.10 points or 0.2 percent at 15,713.78, the Nasdaq is down 44.89 points or 1.1 percent at 3,887.05 and the S&P 500 is down 8.47 points or 0.5 percent at 1,762.02.

The weakness on Wall Street comes following the release of a report from the Commerce Department showing stronger than expected U.S. GDP growth in the third quarter.

While the report provides a relatively upbeat sign regarding the U.S. economy, it has added to worries that the Fed may begin scaling back its asset purchase program sooner than anticipated.

The Commerce Department said U.S. gross domestic product rose by 2.8 percent in the third quarter compared to economist estimates for an increase of 2.0 percent.

GDP growth accelerated from the 2.5 percent increase in the second quarter, reflecting a deceleration in imports and accelerations in private inventory investment and state and local government spending.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "Overall, the pick-up in GDP growth will presumably add to the speculation that the Fed might yet begin tapering its asset purchases in December."

"Frankly, it's hard to know exactly what precise improvement Fed officials are looking for after all the flip-flopping," he added. "October's payrolls figures, due out tomorrow, will provide a little more insight."

A separate report from the Labor Department showed that initial jobless claims fell for the fourth straight week, coming in roughly in line with economist estimates.

The worries about the outlook for the Fed's stimulus program offset the positive reaction to news that the European Central Bank cut its main refinancing rate by 25 basis points to a new record low of 0.25 percent.

Despite the pullback by the broader markets, shares of Twitter (TWTR) have spiked sharply higher in their debut on the New York Stock Exchange.

Twitter has surged up by 73.6 percent after the social media giant priced its initial public offering of 70 million shares at $26 per share.

Sector News

Telecom stocks continue to see substantial weakness in mid-day trading, with the NYSE Arca Telecom Index plunging by 3 percent. With the loss, the index is pulling back well off yesterday's five-year closing high.

CenturyLink (CTL) has helped to lead the telecom sector lower, tumbling by 5.6 percent after providing disappointing fourth quarter earnings guidance.

Significant weakness is also visible among tobacco stocks, as reflected by the 2.8 percent drop by the NYSE Arca Tobacco Index. Schweitzer-Mauduit (SWM) is posting a steep loss after reporting weaker than expected third quarter results.

Biotech stocks are also under pressure on the day, extending a recent downward trend. The NYSE Arca Biotechnology Index is down by 1.2 percent after hitting its lowest intraday level in almost a month.

Steel, airline, natural gas and networking stocks are also seeing notable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index fell by 0.8 percent, while Hong Kong's Hang Seng Index ended the day down by 0.7 percent.

Meanwhile, the major European markets turned mixed over the course of the session. While the German DAX Index rose by 0.4 percent, the French CAC 40 Index edged down by 0.1 percent and the U.K.'s FTSE 100 Index dropped by 0.7 percent.

In the bond market, treasuries have shown a moderate move to the upside. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 3.1 basis points at 2.609 percent.