U.S. equities and stock exchange traded funds slipped Thursday as traders seemed to engage in the time-honored tradition of taking profits after a string of record gains over the past two weeks.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were 0.4% lower Thursday.
“It seems like after yesterday’s surge, there is no real news out there this morning and it is almost like the market’s simply taking a breather,” Ryan Detrick, senior market strategist at LPL Financial, told Reuters.
The S&P 500 and Nasdaq on Wednesday experienced their best trading session since the November election after President Donald Trump provided a more measured tone in his speech to Congress and financials rallied on rising interest rate expectations.
Nevertheless, investors may have grown wary of the high valuations after the record-breaking streak the equities markets enjoyed over the past few weeks, opting to trim some of their positions to lock in gains.
“The losses are much smaller than the gains yesterday, so it seems like some modest profit taking here as we gear up for the upcoming news,” Detrick added.
“One-way markets are not healthy up or down,” Jonathan Corpina, senior managing partner at Meridian Equity Partners, told the Wall Street Journal.
Looking ahead, investors will be keeping an eye on the Federal Reserve’s policy meeting on March 14, 15. A number of Fed officials have already voiced a greater likelihood of interest rate hikes, given the strengthening economy. Federal Reserve Chairwoman Janet Yellen will give a speech Friday and could provide further insights on a move ahead.
Options traders are currently pricing in a 74% chance of a rate hike this month, compared to about a 30% chance at the start of the week.
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