NEW YORK (REUTERS) - United States (US) stocks retreated slightly on Thursday as investors paused after the Federal Reserve's decision to keep its stimulus intact sparked a rally that lifted the Dow and S&P 500 to record highs.
Major US stock indexes oscillated between modest gains and losses on the heels of Wednesday's rally, with the S&P showing a swing of less than 10 points between the high and low of the session.
Many market participants had expected the Fed to announce it would begin to trim its stimulus, but the central bank instead said it would continue buying US$85 billion (S$106 billion) in bonds every month.
The programme has been instrumental in lifting the benchmark S&P index 20 per cent this year while keeping Treasuries yields under pressure.
"It's not unusual, no matter what the circumstance is, for markets after a big up day or a big down day to level out," said Mr Keith Bliss, senior vice-president at Cuttone & Co in New York.
"You are going to have people re-evaluating right here because once again we are in uncharted territory."
The Fed said it wants more evidence of solid economic growth before beginning to withdraw its stimulus. Data on Thursday showed factory activity in the US mid-Atlantic region increased by the most in more than two years and firms' optimism about the future hit a 10-year high.
A Reuters poll of 17 primary bond dealers on Wednesday found that nine were now looking for the US central bank to trim its bond purchases in December, but most said their forecasts were very far from certain.
News that the Fed would delay winding down its stimulus until it had more evidence of solid economic growth boosted global equity markets on Thursday, especially emerging markets, as investors returned to riskier assets.
The Dow Jones industrial average fell 40.39 points or 0.26 per cent, to 15,636.55, the S&P 500 lost 3.18 points or 0.18 per cent, to 1,722.34 and the Nasdaq Composite added 5.743 points or 0.15 per cent, to 3,789.384.
The S&P hit 1,729.86, a record intraday high. The broad benchmark and the 30-stock Dow industrials closed at record highs on Wednesday, while the Nasdaq Composite closed at its highest in 13 years.
JPMorgan Chase & Co, fell 1.2 per cent to $52.75 after the biggest US bank agreed to pay approximately US$920 million in penalties to regulators in two countries to settle some of its potential liabilities from its US$6.2-billion "London Whale" derivatives loss last year, according to terms made public on Thursday. The KBW bank index lost 1.4 per cent.
Shares of Tesla Motors hit a record high of US$180.47, boosted in part by an upbeat note from analysts at Deutsche Bank. Shares of the electric car maker closed up 7 per cent at US$177.92.
Agilent Technologies was one of the best performers on the S&P 500 after the company said it will spin off its electronic measurement business to focus on its fast-growing healthcare business. The stock gained 3.4 per cent to US$50.98.
Oracle Corp forecast sales and profit for its second quarter that fell short of expectations as it continues to battle soft global IT demand and smaller rivals. Its shares slipped edged up 2 cents to US$33.89.
Rite Aid Corp shares surged 23.5 per cent to US$4.58 after the drugstore chain raised its profit forecast for the current year after reporting a fourth straight quarterly profit.
Volume was active with about 6.74 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, above the daily average of 6.24 billion.
Declining stocks outnumbered advancing ones on the NYSE by 1,740 to 1,248, while on the Nasdaq, decliners beat advancers 1,364 to 1,136.