S&P 500 suffers worst day since late August; Twitters surges
NEW YORK (Reuters) - Frenzied buying in Twitter shares grabbed Wall Street's attention on Thursday, as the social media stock surged well above expectations, while major indexes fell, with the S&P 500 suffering its worst daily decline since August.
The broader market was hurt by weak earnings from Whole Foods and Qualcomm. The tech-heavy Nasdaq index recorded its biggest daily decline in a month.
"Twitter is grabbing all the attention here, but what you should really look at is also how the Nasdaq and the small caps are suffering today while the defensive stocks are holding up. It suggests that there are cracks under the surface," said Ryan Detrick, analyst at Schaeffer's Investment Research in Cincinnati, Ohio.
Twitter Inc (TWTR.N) soared as much as 92 percent in its first day of trading on the New York Stock Exchange as investors snapped up shares in the popular microblogging site in a frenzy that recalled the days of the dot-com bubble.
The shares opened at $45.10 a share, up from the initial public offering price of $26 set Wednesday, then added to those gains, hitting a high above $50. The stock closed up 73 percent at $44.90 with 117 million shares traded.
"This crowns Twitter probably as the most expensive IPO on a price-to-sales metric ever," said Channing Smith, managing director at Capital Advisors in Tulsa, Oklahoma. "With this multiple, you're leaning on everything going right," Smith said.
The rest of the market was more downbeat. Qualcomm (QCOM.O) shares fell 3.8 percent to $67.09, one of the biggest drags on both the S&P 500 and Nasdaq 100 .NDX, after the company forecast revenue below expectations.
The Dow Jones industrial average .DJI was down 152.90 points, or 0.97 percent, at 15,593.98. The Standard & Poor's 500 Index .SPX was down 23.34 points, or 1.32 percent, at 1,747.15. The Nasdaq Composite Index .IXIC was down 74.61 points, or 1.90 percent, at 3,857.33.
The Nasdaq was led lower by an 11 percent drop in Whole Foods (WFM.O) after its results on Wednesday, while Tesla Motors (TSLA.O) continued its slide, dropping 7.5 percent one day after a big fall on lackluster earnings and a third car fire. Tesla remains a favorite among short-sellers who believe it is overvalued.
The Russell 2000 index .TOY of mid- and small-cap stocks fell 1.8 percent, its worst daily decline since late August.
Trading in OTC securities was resumed at 3:00 p.m. EST (2000 GMT) after a connectivity issue that had triggered a halt in more than 10,000 equities was resolved.
Investors in U.S. stocks shrugged off the European Central Bank's move to cut interest rates after a slump in inflation sparked fears the euro zone's economic recovery could stall. The move reinforced expectations global central banks will continue to buoy struggling economies.
Separately, data showed the U.S. economy grew 2.8 percent in the third quarter, but that estimate, which will be revised, was affected by a larger-than-expected build-up of inventories, which tends to subtract from growth later on. Initial jobless claims fell 9,000 to a seasonally adjusted 336,000 last week, roughly in line with expectations.
Those reports, as well as Friday's much-anticipated jobs numbers, will give investors some insight into how long the Fed will keep buying $85 billion a month in bonds. The central bank's stimulus has been a key component of the 24.1 percent year-to-date gain in the S&P 500, putting the index on pace for its best yearly performance since 2003.
About 6.7 billion shares of NYSE-listed securities, AMEX and regional exchange-listed securities and Nasdaq-listed securities traded on Thursday, according to data by Bats Global Markets.
(Reporting by Angela Moon; Editing by Nick Zieminski)