U.S. stocks closed mixed on Thursday as investors eyed options expirations and weighed the Federal Reserve statement that indicated a rate hike would come gradually.
"It's a residual effect of what (Fed Chair Janet) Yellen said yesterday," said Peter Boockvar, chief market analyst at The Lindsey Group. "People are going to debate back and forth whether she is going to raise rates."
Of the major indices, only the Nasdaq held higher, led by Facebook to briefly touch the psychologically key 5,000 level hit on Wednesday.
Facebook closed up more than 2 percent, on pace for the stock's best weekly gain in five months. On Tuesday, the social media company announced that it will roll out a money-sending function on its Messenger app.
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The Dow Jones industrial average closed down more than 100 points and the S&P closed lower, giving back some of their major gains from Wednesday following dovish Fed news.
"I think you're getting power from the biotech space which is helping that (divergence)," said Robert Pavlik, chief market strategist at Boston Private Wealth. "Some of the chipmakers are seeing some interest—chips related to the automobile space."
As tech companies such as Google announce development of self-driving cars, established automakers have expressed similar intentions, or incorporate more technology into their dashboards.
The Russell 2000 edged higher to a record, extending gains from Wednesday.
The U.S. Federal Reserve removed "patient" from its statement on Wednesday, as most analysts expected, but lowered its December rate outlook and cut economic forecasts.
"Today's investors realize that we are going to see a rate hike this year," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management. He added that with Yellen shifting her tone from being "very specific to where she emphasizes data dependent, (there will be) more volatility and uncertainty in markets."
Dan Veru, chief investment officer at Palisade Capital Management, expects more mergers and acquisitions.
"The Fed looks quite disciplined here and (it) helps the economy to grow," he said. But "the shape of the recovery is so flat and so gradual that you'll see companies motivated to do deals."
The U.S. 10-year note yield held below 2 percent. The U.S. dollar recovered some of its recent losses as the euro fell to trade just above $1.06.
Crude oil futures settled down 70 cents, or 1.57 percent, at $43.96 a barrel on the New York Mercantile Exchange. Earlier, oil fell more than 3 percent after OPEC news renewed fears of oversupply. Crude gained on Wednesday following the release of the Fed statement.
"When the Fed does raise rates they're not going to be as aggressive," said Peter Cardillo, chief market economist at Rockwell Global Capital. "It's all part of a technical movement (today). A lot of people got caught on the wrong side of the Fed (yesterday)."
He noted that Thursday's session would also focus on Friday's expiration of contracts for individual stock options, stock futures, stock indexes and stock index futures, a quarterly event known as "quadruple witching."
"It really increases volatility...and tends to unwind itself come Monday as people lay on those debts again," said Art Hogan, chief market strategist at Wunderlich Securities.
The Dow has posted triple-digit gains or losses for the majority of sessions in the last few weeks, leading to an alternating pattern in this candlestick chart of the last 30-days' performance: