Home Stocks Stocks pause after post-midterms rally as Wall Street's attention turns to the Fed

Stocks pause after post-midterms rally as Wall Street's attention turns to the Fed

4 min read

Stocks were little changed on Thursday following big gains in the previous session as investors focused on the latest monetary policy decision from the Federal Reserve.

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The Dow Jones Industrial Average rose 36 points as Walgreens shares outperformed. The S&P 500 slipped 0.1 percent, led lower by the communications services sector. The Nasdaq Composite lagged, falling 0.3 percent as Qualcomm shares fell sharply.

The Fed is expected to keep rates unchanged, but investors will look for clues about the central bank’s futures moves on monetary policy. The Fed has hiked rates three times this year and is forecast to raise them once more before year-end.

Thursday’s moves come after the major stock indexes posted sharp gains following the U.S. midterm election. The S&P 500 and Dow both rose more than 2 percent on Wednesday, notching their biggest post-midterm elections gains since 1982.

The outcome, with Republicans holding control of the Senate and the Democrats getting back control of the House, was widely expected and lifted another layer of uncertainty among the many that investors are dealing with.

“Generally, after the midterms, the market is very positive,” said Peter Mallouk, president and CEO of Creative Planning. “It’s reacting to a sense of clarity.”

With this government setup, Wall Street expects President Donald Trump’s business-friendly policies to continue while some of his more disruptive market actions will have a check on them.

The result also leaves the door open for bipartisan cooperation on infrastructure. Both Trump and Democrats have expressed interest in pushing forward an infrastructure measure.

Peter Cardillo, chief market economist at Spartan Capital Securities, said this outcome clears the path for stocks to rally into the end of 2018.

“We’re in the midst of a good rally that could continue into year-end,” Cardillo said. “I don’t see a threat of Trump’s economic policies being reversed.” He added: “There’s enough economic substance to continue higher.”

Qualcomm shares fell more than 6.5 percent after the company issued weaker-than-expected revenue guidance for fiscal first quarter 2019. The company cited lower Apple legacy shipments and lower demand out of China.

Silvia Amaro
contributed to this report.

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