Wall St set to open lower after election surge; Fed meet in focus

US stock indexes were set to dip on Thursday, following a rally in the previous session that was spurred by relief after the midterm elections, with investor focus shifting to the Federal Reserve’s interest rate decision.

The S&P 500 futures pointed to a 0.35% opening loss, with investors punishing shares of chipmaker Qualcomm and generic drugmaker Perrigo after their weak forecasts.

Stocks gained more than 2% on Wednesday after Americans voted for a divided Congress, which was largely anticipated by investors who raised bets that it would be positive for stocks.

While it could make it harder for President Donald Trump to push through new legislations such as additional tax cuts, investors are hoping for compromise on policies such as increasing infrastructure spending.

Despite the dip in futures, which according to traders was natural after strong gains seen on Wednesday, investors are positive about the outcome.

“The general sentiment is I should be buying into a split Congress, because it probably means nothing will happen out of Washington,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.

The Fed, which is set to release its rate decision at 2:00 pm ET, is expected to leave interest rates unchanged, but the statement that follows could lay the ground for a fourth rate hike in December and for the next year.

A steep selloff in October has taken the S&P 500 down 4.2% from its record high, with investors worried that the US economy could gather more steam and encourage the Federal Reserve to raise interest rates further.

However, some of those worries were put to rest by Wednesday’s election results, which reduced the odds of further corporate tax cuts by the Trump administration.

At 8:49 a.m. ET, Dow e-minis were down 64 points, or 0.24%. S&P 500 e-minis were down 11 points, or 0.39% and Nasdaq 100 e-minis were down 41.75 points, or 0.58%.

Qualcomm fell 8.1% in premarket trading after the chipmaker forecast sales revenue for the holiday shopping quarter below analysts’ estimates, as it took a hit from the loss of chip sales to Apple Inc.

Perrigo Co dropped 10.0% after the company cut full-year earnings forecast on lowered expectations from its prescription pharmaceuticals.

TripAdvisor Inc jumped 7.5 after the hotel search website reported better-than-expected third-quarter profit.