U.S. stocks on Thursday looked on a path to retreat from a run of records as the Federal Reserve communicated a faster path of rate increases in 2017.
The U.S. central bank lifted its key short-term rate to a range of 0.5% to 0.75%, from the previous 0.25% to 0.5%. It is also now planning three rate hikes in 2017, compared with the two hikes it had previously mapped out.
Futures for the major benchmarks were up modestly in up-and-down trade, with those for the Dow Jones Industrial Average gaining 16 points, or 0.1%, to 19,779.00. S&P 500 index futures slipping 1.25 points, or less than 0.1%, to 2,250.25, and futures for the Nasdaq-100 gave up 8.25 points, or 0.2%, 4,924.50.
The major indexes ended a volatile session lower on Wednesday, as investors considered the prospect of a faster pace of interest rate increases in 2017 a reason to pull back from the Federal Reserve, led by Chairwoman Janet Yellen. The Dow Jones Industrial Average dropped 118.5 points, or 0.6%, to 19,792.66. The S&P 500 index fell 18.44 points, or 0.8%, to 2,253.28. The Nasdaq Composite Index relinquished 27.16 points, or 0.5%, to 5,436.67.
While equities pulled back Wednesday, stocks have surged since the presidential election in November. Gains have been attributed to expectations that President-elect Donald Trump's policy proposals, such as tax cuts and deregulation, will spur economic growth. As a result, the Dow has been stepping closer to the key psychological level of 20,000, and major indexes have been hitting a series of record closes.
After the Fed decision, the "market disregarded Yellen's view that the shift in the so-called "dot plot' was small, and not all members actually agree that rates need to rise next year. However, "animal spirits," unleashed by President-elect Trump, "have won the day," said Kathleen Brooks, research director at City Index, in a note Thursday.
"The view seems to be that Trump will deliver on his fiscal stimulus promise, the economy will expand sharply, inflation will rise and the Fed will need to hike rates more than currently forecast, but not by enough to lead to a serious stock market sell-off," she wrote.