The Dow Jones Industrial Average remained in positive territory Thursday as stocks traded mostly lower ahead of a monetary-policy statement from the Federal Reserve, which could offer fresh clues on the pace of rate increases.

How are benchmarks performing?

The Dow Jones Industrial Average DJIA, +0.07% gained 35 points, or 0.1%, to 26,21, while the S&P 500  SPX, -0.25% shed 5 points, or 0.2%, to 2,808 and the Nasdaq Composite COMP, -0.51% fell 35 points, or 0.5%, to 7,534.

On Wednesday, all three indexes ended the session just shy of their intraday highs and booked their best daily gains in weeks. The Dow and S&P 500 have thus far risen on three straight sessions, while the Nasdaq has booked back-to-back advances.

What’s driving the market?

Stocks have mostly risen in the past few days, with midterm election results removing a measure of uncertainty that had weighed on investors’ sentiment.

See: Here’s why stock investors say ‘gridlock is good’ after midterms deliver split Congress

Although investors will continue to process the long-term implications of Democrats wresting control of the House of Representatives and Republicans retaining a majority in the Senate—a widely expected outcome—the Fed’s monetary policy will likely draw the lion’s share of Wall Street’s focus.

Read: Fed to remain stoic in face of market gyrations

The Fed concludes its two-day policy sit-down at 2 p.m. Eastern Time Thursday. The central bank is not expected to announce a change to its current policy until December but the Fed is expected to provide insights into the economy, its expectations for inflation and any lingering effects of a protracted trade spat between the U.S. and China.

Meanwhile, quarterly earnings continue to roll in. Around 87% of companies in the S&P 500 have reported third-quarter results so far, with average earnings growth of over 25%, according to FactSet data. Investors are worried that steady growth may not last for long, especially as expansion elsewhere in the world has stalled.

DJIA, +0.07% Also see: The ‘smart money’ isn’t buying the stock-market bounce, and that could mean a test of the lows: analyst

One additional item on investors’ radar is drama surrounding the resignation of Jeff Sessions as attorney general Wednesday.

President Donald Trump had repeatedly blamed Sessions for special counsel Robert Mueller’s investigation into potential connections between the Trump campaign and Russian interference during the 2016 election.

Read: How the midterms made history: Numerous firsts emerge from Election Night results

On the data front, first-time unemployment claims fell by 1,000 in the week ended Nov. 3 to 214,000, the Labor Department said. That was slightly higher than the 210,000 forecast by economists polled by MarketWatch. The total number of Americans collecting jobless benefits fell to its lowest level since the summer of 1973.

What are the strategists saying?

“I think the fact that we’re stable today after that runup yesterday is a positive sign,” Ed Keon, chief investment strategist at QMA, told MarketWatch. “I find it encouraging that bond yields ended up higher yesterday and they’re higher today. It suggests that the market is a little less worried about a recession and more confident of growth.”

Keon doesn’t expect much new information from the Fed’s statement as there has been little change to either unemployment or inflation data since the FOMC’s September meeting. If, however, the Fed does include language in its statement that indicates it will be “flexible in its approach,” to the course of future interest rates, expect to see the market rally, he said.

Michael O’Rourke, chief market strategist at JonesTrading, warned clients not to be comforted by the Wednesday rally, which, he argued in a research note, “has the hallmarks of bear market rally­­­—a strong move on light volume thanks to a hollow catalyst.”

“Other market headwinds will be reasserting themselves soon enough,” O’Rourke wrote. “Did this market just rally sharply in reaction to a political election result on a day where the attorney general’s resignation potentially may place the nation on a path to a constitutional crisis? The catalyst is beginning to look even more hollow.”

Which stocks are in focus?

Shares of Tesla Inc. TSLA, +1.18%  rose 1.2% after the electric car maker named Robyn Denholm as its new chairman, replacing Chief Executive Elon Musk as the head of the board with a relative outsider who will face the difficult task of overseeing the maverick billionaire.

Shares of Arris International PLC ARRS, +10.06% rallied 10% after the cable-industry vendor said it was being acquired by CommScope Holding Co. Inc. COMM, -22.89%

Shares of Cardinal Health Inc. CAH, +3.43% gained 4% after the health care services company reported fiscal first-quarter profit and revenue that rose above expectations, boosted by strength in its pharmaceuticals business.

D.R. Horton Inc. DHI, -6.44% fell 5.4% after it reported fiscal fourth-quarter earnings in line with expectations, but its revenue fell short as rising prices and higher interest rates have led to some moderation in demand for housing.

Shares of Monster Beverage Co. MNST, -3.92% fell 3.2% after CEO Rodney Sacks said in an earnings call with analysts that Coca-Cola Co. KO, -0.22% planned to release two new competitor drinks. Monster has entered into arbitration with Coca-Cola, its biggest shareholder, to determine whether Coca-Cola will be permitted to launch competitor drinks in April 2019, and the result of the dispute could have implications for whether or not Coke will fully acquire Monster.

Wynn Resorts Ltd. WYNN, -12.14%  stock sank 12% after an earnings call late Wednesday during which CEO Matthew Maddox said he anticipates a “soft” market in the fourth quarter for its Macau business line.

TripAdvisor, Inc. TRIP, +16.02% is rallying 15% after it released better-than-expected earnings.

Square Inc. SQ, -9.46% tumbled 9.7% after the company issued disappointing guidance for the fourth quarter.

Shares of Qualcomm Inc. QCOM, -7.61% dropped 7.3% following the announcement Wednesday evening that the company lost money in the third-quarter.

How are other markets trading?

Asian stock markets were higher with the exception of Chinese indexes while European equities were mostly lower.

Oil prices CLZ8, -1.17%  dropped, leaving the U.S. benchmark in danger of entering bear market territory. Gold GCZ8, -0.30%  was weaker and the dollar DXY, +0.22% firmed.

—Mark DeCambre contributed to this article

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