The major U.S. index futures are currently pointing to a roughly flat open on Friday, with stocks likely to show a lack of direction after moving sharply higher over the past few sessions.
Traders may take a breather following the recent surge on Wall Street, which has lifted the major averages to new record highs.
The rally largely reflected a positive reaction to President Donald Trump’s decisive victory in the U.S. presidential election.
Trump’s return to the White House is expected to be positive for corporations and the U.S. economy, although there are some concerns about the effect planned tariff increases will have on inflation.
While some traders may look to cash in on the recent strength in the markets, others may be concerned about missing out on further upside.
After moving sharply higher on Tuesday and Wednesday, stocks showed another strong move to the upside during trading on Thursday. With the continued advance, the Nasdaq and the S&P 500 reached new record closing highs.
The tech-heavy Nasdaq led the charge, surging by 285.99 points or 1.5 percent to 19,269.46, while the S&P 500 climbed 44.06 points or 0.7 percent to 5,973.10.
The narrower Dow, on the other hand, spent the day lingering near the unchanged line before closing down just 0.59 points at 43,729.34.
The continued strength on Wall Street partly reflected ongoing optimism about the impact of former President Donald Trump’s return to the White House.
The markets also benefited from Trump’s victory over Vice President Kamala Harris being decisive, avoiding the uncertainty that would be created by a prolonged vote counting process and potential legal challenges.
Stocks saw continued strength as the Federal Reserve announced its widely expected decision to lower interest rates by a quarter point.
After aggressively slashing interest rates by half a percentage point in September, the Fed said it has decided to lower the target range for the federal funds rate by 25 basis points to 4.50 to 4.75 percent.
The central bank said its decision to continue lowering rates comes as labor market conditions have generally eased, while inflation continues to make progress towards its 2 percent objective.
However, the Fed said the risks to achieving its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run are roughly in balance.
“The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate,” the Fed said.
In considering future adjustments to rates, the central bank said it will continue to carefully assess incoming data, the evolving outlook, and the balance of risks.
Fed Chair Jerome Powell stressed during his post-meeting press conference that rates are not on “any preset course” and said the central bank will make future decisions “meeting by meeting.”
Powell also said the Fed is “well positioned” to deal with the risks to both sides of its dual mandate, noting the it can cut rates more slowly or more quickly depending on the economic developments.
Semiconductor stocks extended the surge seen over the two previous sessions, driving the Philadelphia Semiconductor Index up by 2.3 percent.
Considerable strength was also visible among software stocks, as reflected by the 1.9 jump by the Dow Jones U.S. Software Index.
Gold stocks also saw significant strength amid a sharp increase by the price of the precious metal, moving notably higher along with retail and commercial real estate stocks.
On the other hand, banking stocks pulled back sharply after Wednesday’s spike, dragging the KBW Bank Index down by 2.7 percent. Telecom, oil service and brokerage stocks also gave back ground.