By Anora Mahmudova and Barbara Kollmeyer, MarketWatch

Twitter, Garmin jump; Fed due later

NEW YORK (MarketWatch) -- The U.S. stock market fell on Wednesday, as investors grew concerned that the Federal Reserve might start raising interest rates sooner than anticipated following a much stronger pace of economic growth in the second quarter.

The U.S. economy grew at an annual pace of 4% in the April-July period while inflation surged to the highest level in three years, prompting some in the market suggest the Fed might be behind the curve on interest rates. Also read: Fed to react cautiously to second-quarter GDP data

The second-quarter GDP report showed the economy "really bounced back nicely," said Peter Cardillo, chief market economist at Rockwell Global Capital, in a phone interview.

But Cardillo noted the GDP report also featured a higher inflation reading, and that could be sparking worries that the Fed statement at 2 p.m. will be hawkish, with central bankers signaling they might raise rates sooner than expected.

Tech stocks were shining amid a buying frenzy in Twitter Inc. (TWTR) after the social media network's results blew past analysts' forecasts. The Nasdaq Composite (RIXF) rose 12 points, or 0.3%, to 4,454.97.

The S&P 500 (SPX) was nearly down 2 points, or 0.1%, at 1,967.84. The Dow Jones Industrial Average (DJI) lost 47 points, or 0.3% to 16,864.59.

Follow MarketWatch's live blog of today's stock-market action.

The U.S. economy grew at a 4% annual pace in the second quarter, expanding at the fastest pace since last fall. Inflation as measured by the Federal Reserve's preferred price index surged in the second quarter to the highest annual rate in three years, potentially making the central's bank effort at managing the U.S. recovery more difficult.

Separately, the 218,000 jobs added by the private sector in July fell short of Wall Street expectations. Still, it was the fourth straight month in which that part of the economy has added more than 200,000 jobs.

Investors also remain focused on the outcome of the Federal Reserve's meeting and the policy statement due at 2 p.m. Eastern Time. Economists expect the central bank to reduce the monthly pace of its bond purchases by another $10 billion to $25 billion, and to signal that it intends to end quantitative easing in October. Investors will be looking for any hint that the first interest-rate hike from the Fed could come sooner than expected or that rates could go up faster than anticipated.

Also read: This tweak from the Fed could rock the market

Twitter rules

Shares of Twitter leapt 21% as analysts moved up price targets in the wake of blowout results. "Stronger results amid a negative sentiment should propel the stock higher," said Cantor Fitzgerald analyst Youssef Squali in a note to investors. He lifted his price target to $58 from $40. Read: Can Twitter convert the 'logged-out'?

Humana(HUM) shares fell 5.7% after the health care insurer's profit fell slightly short of expectations, but sales beat forecasts. The company also confirmed its 2014 per-share guidance.

Shares of Sprint (S) fell 2% after the mobile-phone company swung to a profit in the second quarter, as the pace of subscriber losses slowed.

Amgen(AMGN) shares rose 5% after the company posted a 23% rise in earnings, and announced a 15% cut in its workforce as part of a restructuring program late Tuesday.

DreamWorks Animation SKG Inc. shares (DWA) fell 13% after the movie studio swung to a second-quarter loss. (Read more about the day's notable movers here: http://www.marketwatch.com/story/twitter-amex-yelp-among-stocks-to-watch-2014-07-29.)

Spain stocks rise, Russian blue-chip index surges

European stocks traded mostly lower, with the exception of gains in Spanish markets, after surprising economic growth data. In Asia, Hong Kong stocks rose for a seventh straight session.

The Russia MICEX index of blue-chips surged more than 2% on Wednesday, which one analyst said is because the new sanctions don't affect the country's key gas sector. Some strategists maintain, though, that Russia stocks remain a tricky bet in wake of those sanctions.

In other markets, crude-oil prices (CLU4) rose, gold (GCQ4) gave up gains and fell after the strong GDP data. The dollar index (DXY), which measures the greenback against a basket of six currencies, traded slightly higher.

Also read: Need to know: Ditch your 'portfolio patriotism' ahead of dog days of August

More must-reads from MarketWatch

Mark Hulbert: The hidden truth about the stock market in August

Why this bond veteran is worried

Watch UCLA campus flood

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

SentinelOne (NYSE:S)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more SentinelOne Charts.
SentinelOne (NYSE:S)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more SentinelOne Charts.