By Saumya Vaishampayan
U.S. stock futures inched lower Thursday, pulling back after a
dovish Federal Reserve spurred strong gains in stocks.
S&P 500 futures fell three points, or 0.2%, to 2089. E-mini
Dow futures slipped 24 points, or 0.1%, to 17964, while e-mini
Nasdaq-100 futures were nearly flat at 4420.
In its statement on monetary policy Wednesday, the Fed dropped
its promise to remain "patient" before lifting interest rates.
Still, economic forecasts and comments by Fed Chairwoman Janet
Yellen indicated the central bank remains in no hurry to raise
rates, raising the possibility of a rate increase later than
previously expected.
That caught many investors off guard, causing sharp reversals in
trades that had become popular in the days leading up to the Fed
statement, said Art Hogan, chief market strategist at Wunderlich
Securities. On Wednesday, the dollar tumbled against other
currencies, while stocks gained. The Dow Jones Industrial Average
rose 1.3% to 18076.19 and the S&P 500 advanced 1.2% to
2099.50.
Thursday's early trade saw an "unwind of that overreaction," he
said. The dollar rebounded, with the euro falling to $1.0709 from
$1.0864 on Wednesday, and stock futures paused.
While stock-market action has been choppy in recent sessions,
stocks are hovering near all-time highs. The Dow is 1.2% below its
record of 18288.63, while the S&P 500 is less than 1% away from
its record of 2117.39. The Russell 2000 Index, the benchmark for
small-cap stocks, ended at a fresh record on Wednesday.
While the Fed's first rate increase is likely to spark
volatility across assets, it will be prompted by evidence of an
improving economy, which tends to boost corporate profit, said Mr.
Hogan. "By the time the Fed starts to lift off it's going to see
significant improvement in the economy, and that's good for
stocks," he said.
Action in European stocks was muted. Germany's DAX slipped 0.1%
while France's CAC 40 added 0.1%.
In commodity markets, gold futures gained 1.2% to $1165.60 an
ounce. Crude-oil futures declined 2.9% to $45.31 a barrel.
Treasurys rose slightly, pushing the 10-year yield down to 1.937%
from 1.945% on Wednesday.
Apple Inc., the largest company in the world by market value,
will make its debut as a Dow component on Thursday, replacing
AT&T Inc. Apple shares rose 0.2% premarket, while those of
AT&T slipped 0.4%.
Home builder Lennar Corp. reported stronger-than-expected
results in the first quarter as a continuing recovery in the
housing market led to a rise in deliveries and prices. Shares rose
1.7% premarket.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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