U.S. growth quickens in third quarter while Nasdaq-100 slides

What did the growth report show?

The U.S. economy grew faster in the third quarter than in the previous quarter, according to the government's advance estimate. That estimate is an early reading of growth. It can be revised as more data arrive.

Why it matters: A separate weekly report showed that new claims for unemployment benefits edged down. These claims count people newly applying for jobless benefits. Fewer claims usually point to a steady job market.

Both reports arrived a day after the Federal Reserve held its benchmark interest rate steady.

Why did stocks fall when economic news was firmer?

Stocks declined on Thursday despite the stronger data. The S&P 500 fell 0.3% to 7,720.39. The Dow Jones Industrial Average, an older and narrower gauge of big U.S. companies, fell 0.3%.

Technology shares did most of the damage. The tech-heavy Nasdaq-100 slid 1.4%. The technology sector fund slid 1.2%, and the communication services fund, home to large internet and telecom companies, slid 1.9%. Available reports do not tie the tech decline directly to the growth figures.

The selling was concentrated. Many other sectors gained. The health care sector fund rose 2.4%, the real estate fund gained 2.2% and the financial fund rose 1.4%. Among 1,070 stocks tracked, 768 rose and 297 fell.

That pattern matters for broad index funds. Large tech companies carry heavy weight in the S&P 500. Their declines can pull the index lower even on a day when many other stocks gain.

What happened to Treasury yields?

Treasury yields declined. A yield is the yearly interest a bond pays, measured against its price. Yields move opposite to bond prices, so falling yields mean bond prices rose.

The 10-year Treasury yield fell 7 basis points to 4.98%. Basis points are the small units used to measure changes in interest rates. The 2-year yield fell 6 basis points to 4.61%, and the 30-year yield fell 5 basis points to 5.32%.

Faster growth can push yields higher when traders worry about inflation. That makes Thursday's decline stand out. Reports did not give a clear reason for it.

What could markets face next?

The Employment Cost Index for the third quarter is due Friday, Oct. 30, at 8:30 a.m. ET. It is the broadest quarterly measure of wage and benefit costs. The Fed watches it for signs of inflation pressure.

The October jobs report follows on Nov. 6 at 8:30 a.m. ET. The October consumer price index, the monthly inflation report, is scheduled for Nov. 10 at 8:30 a.m. ET.

The advance growth estimate itself may also change when the government releases later versions of the report.