S&P 500 snaps 3-day winning streak as the Fed looks to stay the course on raising rates

The S&P 500 closed lower on Thursday following big gains in the previous session as investors digested the latest monetary policy decision from the Federal Reserve.
The broad index pulled back 0.25 percent to 2,806.83 as energy lagged, snapping a three-day winning streak. The Nasdaq Composite also fell 0.5 percent to 7,530.88 as Qualcomm shares fell sharply. The Dow Jones Industrial Average eked out a small gain, however, climbing 10.92 points to 26,191.22 to post a four-session winning streak.
The Fed kept interest rates unchanged, as was widely expected. However, the central bank said in a statement it expects “further gradual increases” in the overnight rate. The Fed also did not mention the volatility that has hit the market recently.
Wall Street eagerly awaited the decision as they looked 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.
“Our guess is the Fed’s going to be gradual. They don’t want to force the issue,” said Tim Courtney, chief investment officer at Exencial Wealth Advisors. “They definitely don’t want to be the ones to invert the yield curve.”
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.
Victor J. Blue | Bloomberg | Getty Images
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S.,
“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 8 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.
Disney shares slipped 0.9 percent ahead of the release of its latest corporate earnings report. The stock jumped more than 1 percent in after-hours trading after the company posted a better-than-expected profit.
Silvia Amaro
contributed to this report.
Investors should watch for three major points out of its report, according to Tuna Amobi, senior equity analyst with CFRA.
The S&P 500 closed lower on Thursday following big gains in the previous session as investors digested the latest monetary policy decision from the Federal Reserve.
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Gina Sanchez of Chantico Global says a North Korean attack, should one occur, isn’t likely to cause significant long-term market impact.
Boris Schlossberg of BK Asset Management says the ISM non-manufacturing report is key to watch ahead the jobs data released Friday.
Chad Morganlander of Washington Crossing Advisors is watching the dollar this week and expects it’ll begin to strengthen heading into the second half of the year.
Stacey Gilbert is the head of derivative strategy at Susquehanna.
Managing Director, ACG Analytics
Managing Director, Head of Technical Analysis, Evercore ISI
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Michael Santoli
Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network’s Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC’s Business Day programming, with a regular appearance on CNBC’s “Closing Bell> (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.
Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.
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