NEW YORK (TheStreet) -- Markets tumbled the most in a month on Thursday as soft consumer spending growth in the third-quarter raised questions about the overall strength of the economic recovery. Overshadowing disappointing headlines was Twitter's more than 70% rise on the day of its initial public offering.
The S&P 500 fell 1.3% to 1,747.19 while the Dow Jones Industrial Average was off 0.97% to 15,594.49. The Nasdaq lost 1.9% to 3,857.33.
U.S. economic growth notched 2.8% for the third quarter, the Commerce Department said Thursday. It was the fastest rate of growth in a year, reflecting compaies move to replenish inventory and a rise in state governments spending. Yet trends within the report showed weakness - consumer spending rose just 1.5%, or the slowest pace in more than 3.5 years.
"Given the majority of the upside surprise reflected by inventory accumulation, we would suggest taking the apparent acceleration in growth with some caution," Barclays Research senior U.S. economist Peter Newland said in a note.
Initial jobless claims fell 9,000 to 336,000 in the week ending November 2, the Labor Department reported Thursday. Economists were expected a slip to 335,000.
Twitter began trading Thursday on the New York Stock Exchange after its initial public offering was priced $26 a share. The stock opened at $45.10 a share, and closed the day up 73% to $44.90. The San Francisco-based company sold $1.82 billion in shares, or just more than 12% of its outstanding stock, in an offering that gives the micro-blogging site a valuation of roughly $14.2 billion. Twitter listed on the NYSE under symbol 'TWTR.'
In corporate news, Toll Brothers (TOL) said it would buy the homebuilding business of California's Shapell Industries for around $1.60 billion in cash. Management also announced preliminary fourth quarter revenues of $1.04 billion up 65 percent on the prior period and beating consensus expectations. Toll shares rose 0.46% to $32.67.
Whole Foods (WFM) plunged 11.2% to $57.27 after the natural and organic food supermarket chain cut its fiscal 2014 same-store sales guidance. The company reported fourth quarter earnings of 32 cents a share on revenue of $2.98 billion after market close on Wednesday, versus the average analyst estimate of 31 cents a share on revenue of $3.04 billion.
Shares in Clear Channel Outdoor Holdings (CCO) slipped 1.4% to $8.92 after the company said third quarter revenue fell less than 1%. Earnings of $723 million for the quarter were down 1% from the same period in 2012.
Both Groupon (GRPN) and Priceline (PCLN) also report after the closing bell. Group is predicted by Wall Street to post a profit of 1 cent a share in the third quarter on sales of $615.7 million. Its shares fell 5.1% to $9.50 on Thursday. Priceline is expected to report third-quarter earnings of $16.15 a share on revenue of $2.22 billion. Its shares were off 3.3% to $1,022. 89.
Stocks were gaining in pre-market trading as the European Central Bank slashed its benchmark interest rate to stimulate growth in the region. The bank lowered borrowing costs to a record low of 0.25% as policymakers continue fight deflation and weak growth rates across the Eurozone.
Earlier in the day, the Bank of England opted to keep in its benchmark interest rate at a record low of 0.5% and maintained its current economic stimulus program of 375 billion pounds or about $603 billion rather than inject additional stimulus to the economy.
The FTSE 100 in London was falling 0.40% while the DAX in Germany was up 0.74%. The Hong Kong Hang Seng settled down 0.68% while the Nikkei 225 in Japan fell 0.76%. Gold slipped $9.30 to settle at $1,308.50, while oil fell 60 cents to close at $94.20.
Ten year U.S. Treasuries were rising 11/32 to dilute the yield to 2.608%, while the U.S. dollar was up 0.41% to $80.84, according to the U.S. dollar index.
Written by Jane Searle and Joe Deaux in New York