US stocks were slightly lower in late morning trading on Friday as investors cashed in after the post-election rally, but the three major indexes continued to hover near record levels. The Nasdaq hit a record high earlier in the session, helped by a rise in Microsoft and other big tech stocks.
US stocks had been on a tear since Donald Trump's surprise victory in the presidential election last week as his proposals to increase infrastructure spending and reduce taxes are seen benefiting the economy. The rally lost steam this week as investors took to the sidelines, awaiting more clarity regarding Trump's policies. Still, the three major indexes are on track to close higher for the second week in a row.
"I think given the major indexes are at or near all-time highs, we're probably due for a little bit of a digestion period," said Terry Sandven, chief equity strategist at US Bank Wealth Management. "Equities are generally expected to move sideways until we get a little more of visibility into what some of the policies are going to be with the new administration."
Federal Reserve Chair Janet Yellen said on Thursday the central bank could raise interest rates "relatively soon", sending out a clear signal for a December move. Traders are pricing in an 83 percent chance of a December move, according to Thomson Reuters data. St. Louis Fed President James Bullard said he was leaning toward supporting an interest rate increase in December and that the real question now would be the Fed's rate path in 2017.
Kansas City Federal Reserve Bank President Esther George also said that while she supports raising interest rates, the US central bank must do so only gradually. At 10:56 am ET (1556 GMT) the Dow Jones industrial average was down 37.08 points, or 0.2 percent, at 18,866.74, about 67 points shy of the record it hit on November 14. The S&P 500 was down 6 points, or 0.27 percent, at 2,181.12. The index hit a record high of 2,193.81 on August 15. The Nasdaq Composite index was down 17.06 points, or 0.32 percent, at 5,316.91.
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