US stocks slipped after energy shares slumped with the major indexes handing back the previous session’s gains sparked by a policy statement from the Federal Reserve that was more cautious than expected.
The Standard &Poor’s 500 index slipped 7 points or 0.34% to 2085 to pare the previous session’s 1.3% gain.
The S&P is now on track to go more than 22 sessions without straight gains almost matching the 23 day run recorded in June 2014.
“It would appear from the reaction yesterday, investors would rather have interest rates stay lower for longer than see the economy improve,” Bruce McCain, who helps oversee more than $25 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, told Bloomberg by phone.
“We’re stepping back a little from what occurred yesterday and we might be in for a period of consolidation.”
The Dow Jones Industrial Average declined 89 points or 0.45% to 17994 rebounding from being down by more than 100 points in early trading. The Nasdaq Composite bucked the trend gaining 8 points or 0.2% to 4991 having flirted with 5000 points earlier in the day.
In its Statement, the Federal Reserve went back on its promise to remain patient before raising the interest rates, a widely expected stance seen to pave the way for a raise earlier in the year than previously hoped.
However, downbeat economic projections and comments made by the Fed’s Chairwoman Janet Yellen indicated that the Bank was not planning to raise the rates any time soon.
Investors will now shift focus to any signs of economic improvement to justify an earlier than expected rate hike.
“The Fed has painted themselves into a bit of a corner here,” Keith Bliss, senior vice-president at Cuttone & Co in New York, told Reuters.
“Now they have an issue where they have the potential for weakening economic data and you have this dollar which is like a runaway freight train.”
To contact the reporter of this story; Jonathan Millet at firstname.lastname@example.org