The S&P 500 and Nasdaq closed slightly lower on Thursday after a Federal Reserve statement, and energy stocks were the biggest drag on the S&P as US crude oil prices fell.
The US central bank said after its two-day meeting that strong job gains and household spending were keeping the economy on track but business investment "moderated from its rapid pace earlier in the year," creating a possible drag on future economic growth.
Aside from the comment about business investments, the Fed statement was largely as expected and suggested to investors that the Fed's next rate hike would be in December. But some investors had hoped for a change in tone after October's market sell-off.
"The Fed has recognised that there is one part of the economy that is slowing a little bit, but it is not deterring them from their 'gradual increase' language. Not yet anyway,” said Jamie Cox, managing partner at Harris Financial Group, Richmond, Virginia.
"There is really nothing to point to what the market had hoped, that there would be a more dovish stance. So I think this is more of what we call a hawkish hold.”
The Dow Jones Industrial Average rose 10.92 points, or 0.04 percent, to 26,191.22, the S&P 500 lost 7.06 points, or 0.25 percent, to 2,806.83 and the Nasdaq Composite dropped 39.87 points, or 0.53 percent, to 7,530.89.
The three indexes had all risen 2 percent in the previous day's session due to a relief rally once the US midterm congressional elections were in the rearview mirror.
Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey said companies were holding off on spending because of uncertainty over a US-China trade war.
"A slowdown in business spending can slow the underpinning of the stock market,” Krosby said. "Is the Fed data-dependent or is it maintaining a rigid schedule for rate hikes in 2019? What would cause the Fed to pause? It’s clear from this statement today that they’re looking at anything that could potentially slow the economy."
The S&P bank index ended the day with a 0.4 percent gain as US Treasury yields rose because bank profits benefit from rising rates.
Energy stocks were the S&P's biggest drag with a 2.2 percent drop as US crude oil futures confirmed a bear market, falling more than 20 percent from their Oct. 3 high as investors focused on swelling global crude supply, which is increasing more quickly than many had expected.
The Wall Street Journal reported that Saudi Arabia's top government-funded think-tank is studying the possible effects on oil markets of a breakup of OPEC in a story citing unnamed people familiar with the matter.
Declining issues outnumbered advancing ones on the NYSE by a 1.26-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favoured decliners.
The S&P 500 posted 33 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 76 new highs and 81 new lows.
On US exchanges 7.23 billion shares changed hands compared with the 8.43 billion average for the last 20 sessions.
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