By Saumya Vaishampayan
U.S. stock futures fell Thursday, pulling back after a dovish
Federal Reserve spurred strong gains in stocks.
S&P 500 futures fell six points, or 0.3%, to 2086. E-mini
Dow futures slipped 42 points, or 0.2%, to 17948, while E-mini
Nasdaq-100 futures lost four points, or 0.1%, to 4416.
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, increasing 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 $1.0654 from
$1.0864 on Wednesday, and stock futures pulled back.
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.
The Fed's first rate increase is likely to spark volatility
across assets. Still, 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.
In economic news, jobless claims rose by 1,000 to 291,000 in the
week ended March 14, the Labor Department said Thursday. Economists
polled by The Wall Street Journal had expected 292,000 new
claims.
Action in European stocks was muted. Germany's DAX slipped 0.2%
while France's CAC 40 added 0.1%.
In commodity markets, gold futures gained 0.8% to $1161.00 an
ounce. Crude-oil futures declined 3.4% to $45.08 a barrel.
Treasurys were little changed, with the 10-year yield at 1.946%,
compared with 1.945% on Wednesday. Yields rise as prices fall.
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 0.2%.
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
1.8% premarket.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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