Stocks finished lower in thin trading Thursday following a disappointing new home sales report and as earlier enthusiasm faded over the Fed's decision to hold interest rates near zero until at least 2014.
The Dow Jones Industrial Average slipped 22.33 points, or 0.18 percent, to close at 12,734.63, led by AT&T and H-P .
The S&P 500 fell 7.60 points, or 0.57 percent, to finish at 1,318.45. The Nasdaq declined 13.03 points, or 0.46 percent, to end at 2,805.28.
Despite the day's losses, all three major averages are on pace for their fourth straight week of gains, for the first time since December 2010.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended above 18.
Most S&P sectors closed in negative territory, led by telecoms and energy.
In addition to keeping rates near zero, the Fed also took the unusual and historic step of setting an inflation target of 2 percent, when it released its economic forecast and said it will maintain its highly accommodative stance to support the recovery.
“This seems to be more of a technical pullback and doesn’t seem to be necessarily caused by one particular thing,” said Marc Pado, U.S. market strategist and technical analyst at Cantor Fitzgerald. “The groups that are doing poorly today were groups that have been on top of the list in the first three weeks of January…so it’s people taking some profits.”
In fact, some strategists expect the market to shoot higher following the brief consolidation.
“I think we’re going to see the S&P move up to the 1,350-1,370 level this year, probably sometime this quarter…we’re probably going to see some good momentum because valuations still look relatively attractive,” said Sam Stovall, chief investment strategist at Standard & Poor’s Equity Research. “We’re only four months into this new bull market…and looking to history as a guide, we find that 3, 6, and 12 months after we see something like that, the market has been up 13.5, 23, and 32 percent with the cyclical sectors leading through 6 and 12 months.”
