MARKET SNAPSHOT: U.S. Stocks Poised For Pullback After Fed Pushes S&P, Dow To Record Highs

By Sara Sjolin, MarketWatch Features Dow Jones Newswires

Dollar slips after major rally

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U.S. stocks were heading for a lower open on Thursday, pulling back from the all-time closing highs logged by the S&P and Dow average after the Federal Reserve outlined plans to shrink its balance sheet.

Traders were also looking ahead to a trio of economic data releases, including weekly jobless claims.

Futures for the Dow Jones Industrial Average shed 18 points, or 0.1%, to 22,358, while those for the S&P 500 index fell 2.95 points, or 0.1%, to 2,502.25. Futures for the Nasdaq-100 index lost 11.25 points, or 0.2%, to 5,967.00.

Record closes: The indicated losses come after a volatile session on Wednesday (http://www.marketwatch.com/story/us-stock-futures-in-holding-pattern-as-historic-fed-decision-looms-2017-09-20). The Nasdaq Composite Index ended marginally lower, but the Dow and S&P managed to eke out small gains and end at record closing levels after trading lower earlier in the day.

The turnaround came after the Fed announced it'll start to unwind (http://www.marketwatch.com/story/still-on-course-fed-signals-one-more-rate-hike-in-2017-2017-09-20) its $4.5 trillion asset portfolio in October, for the first time in nine years, and indicated interests rates will go up in December.

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"The prospect of further rate hikes, no matter how gradual, begs the question of just how many more might it take to slow down the U.S. equity market, or even halt it in its tracks," said Russ Mould, investment director at AJ Bell, in a note.

He pointed out that since 1973, it has usually taken between eight and nine rate hikes to stop a U.S. stock market rally. In 1973, the S&P peaked when rates were at 5.5%; in 1990, it peaked at 8%; and in 2007, the benchmark topped at 4.25%, Mould noted.

But "the trend in those peaks is lower [now] because the world's debt pile has grown -- so the global economy is now much more sensitive to even minor changes in borrowing costs," he said. "This could negate the bull case for stocks that is based on interest rates not reaching prior cyclical peaks for a very long time, because they may not need to."

Check out:How the 'great central bank unwind' could ignite the next financial crisis (http://www.marketwatch.com/story/how-the-great-central-bank-unwind-could-ignite-the-next-financial-crisis-2017-09-20)

The announcement sparked the biggest rally for the ICE dollar index since January, but the greenback eased back on Thursday. The index slipped 0.1% to 92.405. Against the yen , however, the buck jumped to Yen112.51, from Yen112.21 late Wednesday in New York. That move got a boost from the Bank of Japan's decision to leave policy unchanged (http://www.marketwatch.com/story/bank-of-japan-leaves-monetary-policy-unchanged-2017-09-20).

Gold prices slumped after the Fed decision (http://www.marketwatch.com/story/gold-slides-below-1300-after-feds-rate-hike-hint-2017-09-21), as the dollar rose and investors lost interest in non-yielding assets. December gold on Thursday dropped 1.4% to 1,297.90 an ounce, on track for the lowest settlement in almost a month.

Economic news: An update on weekly jobless claims and the Philly Fed index for September are also in focus on Thursday. Both data reports are scheduled for release at 8:30 a.m. Eastern Time.

At 10 a.m. Eastern, a reading on leading economic indicators for August is due.

See:MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic)

Stock movers: Shares of Calgon Carbon Corp.(CCC) soared 59% in premarket action after the maker of air- and water-purification products reached a $1.1 billion deal to be bought by Japan's Kuraray (3405.TO) .

Other markets:Asian shares closed mixed (http://www.marketwatch.com/story/nikkei-gains-steam-outpacing-other-asian-markets-2017-09-20) as they reacted to the Fed decision, with Japan's Nikkei 225 index getting a boost from the weaker yen to close higher. After regional markets closed, S&P Global Ratings cut its credit rating on China to 'A+/A-1'.

The dollar rose against the Chinese yuan (USDCNY) , trading at 6.5919 yuan, compared with 6.5761 late Wednesday in New York.

European stocks rose (http://www.marketwatch.com/story/european-stocks-step-higher-with-bank-gains-providing-a-lift-2017-09-21), while oil prices moved lower.

(END) Dow Jones Newswires

September 21, 2017 06:04 ET (10:04 GMT)