Wall St slips on Fed taper fears

United States stocks declined, with blue chips erasing early gains to fresh record highs, as investors grappled with concerns over what stronger-than-expected US growth might mean for Federal Reserve policy.

The Dow Jones Industrial Average slipped 20 points, or 0.1%, to 15,727 points. Earlier, the blue-chip barometer reached an all-time intraday high of 15,797.68 before pulling back.

The S&P 500 index lost seven points, or 0.4%, to 1,764 points.

The Nasdaq Composite Index shed 36 points, or 0.9%, to 3,896 points.

The European Central Bank's surprise interest-rate cut provided an early boost for stocks.

The first read on third-quarter US gross domestic product showed growth of 2.8%, up from 2.5% in the second quarter and well above expectations of 2%. The price index for personal consumer expenditures--the Fed's preferred gauge for inflation--grew 1.9% versus forecasts of a 1.6% rise.

And initial claims for jobless benefits totalled 336,000 in the latest week, down from a revised 345,000 the week before and close to expectations of 335,000.

"People are conflicted between thinking growth is good, because growth gives us more profits, and thinking more growth means the Fed is inclined to start [reducing stimulus]," said John Rutledge, chief investment officer at New York-based global investment firm Safanad.

Investors continued to flip flop over expectations of Fed policy. Recently, there has been a growing belief that the Fed could start reducing stimulus measures, by cutting back on its $US85-billion-a-month bond-buying program, as early as December. Just two weeks ago, disappointing September jobs data had investors believing the Fed wouldn't move until March, or even June.

Rex Macey, chief investment officer at Wilmington Trust Investment Advisors, said investors continue to quibble over Fed policy. He said the GDP data were a "two-edged sword" because while "the headline number looked great, but a fairly big gain in inventories is a concern."

The yield on the 10-year Treasury note slipped to 2.604% from 2.638% late Wednesday.

Investors will now turn their attention to the October US employment report due Friday.

"The market is at an inflection point," said Quincy Krosby, market strategist at Prudential Financial. "If the jobs data surprises to the upside, this is a market that is going to have to accept that the underlying strength of the US economy is starting to manifest itself."

Meanwhile, the trading debut of Twitter, the biggest technology initial public offering since Facebook last year, offered investors a distraction from the debate over economic data. Twitter opened at $45.10, well above the $26 IPO price, and held those gains in recent trading.

"We can argue all day long about the valuation, but this is exciting," said Art Hogan, managing director at brokerage firm Lazard Capital Markets. And the buzz Twitter's IPO has created is a testament to the optimism investors are feeling, he said.

Earlier, the European Central Bank cut its benchmark interest rate to 0.25% from 0.5%. European equity markets initially rallied on the ECB's move, then erased those gains amid concerns the nascent recovery in Europe may be fading. The Stoxx Europe 600 closed virtually unchanged, paring early gains of as much as 1.5%.

The euro slumped to a near two-month low against the dollar before recovering slightly.

In corporate news, Qualcomm fell after the semiconductor maker reported late Wednesday fiscal third-quarter adjusted earnings that rose slightly less than expected, according to FactSet, and provided a first-quarter outlook that was below current analyst projections.

Whole Foods Market dropped after the high-end supermarket chain cut its earnings and sales growth outlook for the current fiscal year, overshadowing fiscal fourth-quarter earnings that were slightly above forecasts.

December crude-oil futures fell 0.6% to $94.20 a barrel, and November gold futures shed 0.3% to $1,313.40 an ounce, with both reversing early gains.

Asian markets were broadly lower, with Japan's Nikkei Stock Average shedding 0.8%, weighed down by disappointing results from Toyota Motor. China's Shanghai Composite fell 0.5%.