Traders work on the main trading floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York.
U.S. stock index futures fell on Thursday following a Wall Street 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 pointed to a 0.3 percent opening loss, with investors punishing chipmaker Qualcomm Inc and generic drugmaker Perrigo Co after weak forecasts.
Stocks gained about 2 percent on Wednesday after Americans voted for a divided Congress, which was largely anticipated by investors and 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 of compromise on policies such as increasing infrastructure spending.
The Fed, which is set to release its rate decision at 2:00 pm ET, is expected to leave interest rates unchanged, but the statement that follows could lay the ground for a fourth rate hike in December and for the next year.
“Despite equity market weakness in October, the tightening in financial conditions was not large enough to push the Fed off its tightening path, especially as we have already seen some recovery in risk markets since and with the midterms also passing without incident,” Mohammed Kazmi, portfolio manager at UBP, wrote in a morning note.
At 7:37 a.m. ET, Dow e-minis were down 52 points, or 0.2 percent. S&P 500 e-minis were down 9.25 points, or 0.33 percent and Nasdaq 100 e-minis were down 30 points, or 0.42 percent.
A steep selloff in October has taken the S&P 500 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.
Qualcomm fell 5.9 percent in premarket trading after the chipmaker forecast sales revenue for the holiday shopping quarter below analysts’ estimates, as it took a hit from the loss of chip sales to Apple Inc.
Perrigo Co dropped 8.1 percent after the company cut full-year earnings forecast.
TripAdvisor Inc jumped 8.1 after the hotel search website reported better-than-expected third-quarter profit.