The S&P 500 and the Dow hovered near their record highs and were on track for weekly gains of over 1%, along with the tech-heavy Nasdaq.
The Dow Jones Industrial Average fell 91.67 points, or 0.23%, to 41,933.52, the S&P 500 lost 14.32 points, or 0.25%, to 5,699.32 and the Nasdaq Composite lost 19.62 points, or 0.10%, to 17,994.36.
Eight out of the 11 S&P 500 sectors traded lower. Industrial stocks sank to the bottom with a 1.1% loss, while utilities bounced back with a 1.7% gain after three sessions of losses.
Rate-sensitive growth stocks were mixed. Alphabet and Apple gained over 0.4% each, while Tesla slid 1.3%.
Semiconductor companies Advanced Micro Devices and Qualcomm were down over 0.5% each, sending the Philadelphia SE Semiconductor index 1% lower.The S&P 500 and the Dow closed at all-time highs on Thursday, with the Dow settling above 42,000 points. The S&P 500 is set to buck the historical trend of September being weaker for U.S. equities on average.Risk appetite got a boost earlier in the week after the Fed kicked off its easing cycle with a 50-basis-point cut and assured that more were on the way. The central bank also projected a period of steady economic growth and low unemployment and inflation.
“The Fed’s over. The rest of the world decided to buy the U.S. market and also bid up their markets … and now this is the fade,” said Jay Hatfield, portfolio manager at InfraCap.
“The most bullish thing that can happen after such a big run is a stall.”
Traders now see a 60.4% probability of a 25 bps cut in November, as per the CME Group’s FedWatch tool, while a strong majority of economists in a Reuters poll said that the Fed will cut rates by 25 basis points in both November and December.
FedEx plunged 14.4% after reporting a steep drop in quarterly profit and lowered its full-year revenue forecast, sending the Dow Jones Transport index down 3.5%.
Nike jumped 7.5% after saying that former senior executive Elliott Hill will rejoin the company to succeed John Donahoe as president and CEO.
A rebalancing of the main indexes is also expected before the market opens on Sept. 23.
Historically, equities have performed well in a rate-cutting cycle. However, the outlook appears bleak with the S&P 500’s valuations high above its longterm average.
Declining issues outnumbered advancers by a 2.46-to-1 ratio on the NYSE and by a 2.12-to-1 ratio on the Nasdaq.
The S&P 500 posted 13 new 52-week highs and one new low, while the Nasdaq Composite recorded 37 new highs and 31 new lows.
