U.S. stock indexes were set to dip on Thursday, following a rally in the previous session that was spurred by relief after the midterm elections, with investor focus shifting to the Federal Reserve’s interest rate decision.
The S&P 500 futures ESc1 pointed to a 0.35 percent opening loss, with investors punishing shares of chipmaker Qualcomm Inc (QCOM.O) and generic drugmaker Perrigo Co (PRGO.N) after their weak forecasts.
Stocks gained more than 2 percent on Wednesday after Americans voted for a divided Congress, which was largely anticipated by investors who raised bets that it would be positive for stocks.
While it could make it harder for President Donald Trump to push through new legislations such as additional tax cuts, investors are hoping for compromise on policies such as increasing infrastructure spending.
Despite the dip in futures, which according to traders was natural after strong gains seen on Wednesday, investors are positive about the outcome.
“The general sentiment is I should be buying into a split Congress, because it probably means nothing will happen out of Washington,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.
A steep selloff in October has taken the S&P 500 .SPX down 4.2 percent from its record high, with investors worried that the U.S. economy could gather more steam and encourage the Federal Reserve to raise interest rates further.
However, some of those worries were put to rest by Wednesday’s election results, which reduced the odds of further corporate tax cuts by the Trump administration.
At 8:49 a.m. ET, Dow e-minis 1YMc1 were down 64 points, or 0.24 percent. S&P 500 e-minis ESc1 were down 11 points, or 0.39 percent and Nasdaq 100 e-minis NQc1 were down 41.75 points, or 0.58 percent.
Perrigo Co (PRGO.N) dropped 10.0 percent after the company cut full-year earnings forecast on lowered expectations from its prescription pharmaceuticals.
TripAdvisor Inc (TRIP.O) jumped 7.5 after the hotel search website reported better-than-expected third-quarter profit.