By Dan Strumpf And Saumya Vaishampayan
U.S. stocks fell Thursday, pulling back a day after the Federal
Reserve's cautious stance on interest rates spurred strong
gains.
The Dow Jones Industrial Average fell 89 points, or 0.5%, to
17987, while the S&P 500 index declined eight points, or 0.4%,
to 2091. The Nasdaq Composite Index gained eight points, or 0.2%,
to 4991.
Shares of energy companies posted some of the sharpest losses as
oil prices retreated, with the S&P 500 Energy Index shedding
1.5%. Crude-oil futures declined 2.3% to $43.41 a barrel.
Shares of Apple Inc. gave up early gains, falling 0.3% on its
first day of trading as a Dow component. Shares of AT&T Inc.,
replaced by Apple in the Dow, fell 1%.
In its statement on monetary policy Wednesday, the Fed dropped
its promise to remain "patient" before lifting interest rates, a
widely expected shift that opened the door to rate increases this
year.
But downbeat economic forecasts and comments by Fed Chairwoman
Janet Yellen indicated the central bank remains in no hurry to
raise rates. That stance caught many investors off guard and sent
shares rallying sharply, prompting a modest pullback Thursday.
"Today's decline is more of a digestion from yesterday," said
Joe Saluzzi, partner at Themis Trading. "People were more set up
for a rate rise, they were getting ready for it and the market was
getting ready for it. And then they turned around and said, 'Not so
fast.'"
On Wednesday, the Dow Jones Industrial Average rose 1.3% and the
S&P 500 advanced 1.2%, while the dollar pulled back from its
ascent. On Thursday, the dollar resumed its climb, with the euro
falling 1.6% to $1.0659.
While stock-market action has been choppy in recent sessions,
stocks are hovering near all-time highs. The Dow is nearly 2% below
its record of 18288.63 reached in early March. The Russell 2000
Index, the benchmark for shares of small-cap companies, fell 0.1%
after rising to a record on Wednesday.
The Fed's first rate increase is likely to spark volatility
across markets. However, the Fed has linked rate increases to
evidence of an improving economy, which tends to boost corporate
profits, said Art Hogan, chief market strategist at Wunderlich
Securities. "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.
European stocks fell. Germany's DAX slipped 0.7% while France's
CAC 40 eased 0.3%.
In commodity markets, gold futures gained 1.3% to $1166.70 an
ounce.
Treasury prices rose, pushing the 10-year yield down to 1.939%,
compared with 1.945% on Wednesday.
Home builder Lennar 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 0.5%.
Write to Dan Strumpf at daniel.strumpf@wsj.com and Saumya
Vaishampayan at saumya.vaishampayan@wsj.com
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