Wall Street lower as Fed uncertainty weighs on bank stocks

By Yashaswini Swamynathan

REUTERS - U.S. stocks slipped on Thursday, as bank stocks fell after the Federal Reserve provided little clarity into whether it would raise interest rates at its next meeting, even as the central bank painted an upbeat picture of the economy.

The Fed, which left interest rates unchanged on Wednesday, gave no firm signal of a hike in March as it closely watches the impact of President Donald Trump's fiscal policies, adding another layer to the uncertainty triggered by his recent comments and decisions.

The dollar dropped to a near 12-week low of 99.23 against a basket of major currencies. The greenback has been beaten down by Trump's comments on its strength and concerns over his protectionist policies. Prices of safe-haven gold rose to a 10-week high.

Trump's priorities, such as imposing restriction on travel to the United States and withdrawing from a trade deal, have caused uncertainty and made it hard for investors to have conviction in the equity market.

"The Fed is concerned that the unraveling of trade deals could be very negative to the economy," said Peter Cardillo, chief market economist at First Standard Financial in New York.

"You could have improving earnings and good news on the economy, but that is getting overshadowed by the 'worry trade' with investors taking on a wait-and-see attitude."

Initial jobless claims fell more than expected to 246,000 last week, compared with economists' estimates of 250,000, signaling tightening labor conditions. The report comes ahead of a closely watched monthly hiring data on Friday.

At 9:35 a.m. ET (1435 GMT), the Dow Jones Industrial Average was down 35.73 points, or 0.18 percent, at 19,855.21, the S&P 500 was down 6.86 points, or 0.30 percent, at 2,272.69 and the Nasdaq Composite was down 25.75 points, or 0.46 percent, at 5,616.90.

The S&P 500 is on track to fall for the fifth time in six sessions.

Seven of the 11 major S&P 500 sectors were lower, with financials, which would benefit from a higher-rate environment, the biggest drag on the broader index.

Results from a clutch of companies, including Amazon.com, Visa and Amgen, will keep investors busy on Thursday.

Facebook erased premarket gains, to trade down 1.4 percent at $131, despite a strong quarterly earnings.

Ralph Lauren dropped 8.2 percent. The company said Chief Executive Officer Stefan Larson would leave following differences with the company's founder and chairman.

Digital imaging company Shutterfly fell 18 percent to $42.41 after reporting a 30.6 percent decline in quarterly profit.

Mead Johnson jumped nearly 24 percent to $86.26 after Reckitt Benckiser said it was in advanced talks to buy the baby formula maker for $16.7 billion.

Declining issues outnumbered advancers on the NYSE by 1,362 to 1,171. On the Nasdaq, 1,421 issues fell and 752 advanced.

The S&P 500 index showed seven new 52-week highs and four new lows, while the Nasdaq recorded 25 new highs and six new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila)