MW: U.S. stock edge lower ahead of Fed rate decision
U.S. stocks declined modestly on Wednesday as investors remained cautious before a key Federal Reserve policy statement due later in the day.
A pair of economic reports ahead of the opening bell pointed to a robust housing market and firming consumer prices, which coupled with a falling unemployment rate, are likely to give the Fed ammunition to raise rates this year. Investors, however, aren’t expecting a change at today’s meeting.
The S&P 500 SPX, +0.00% was off 2 points, or 0.1%, to 2,014, retreating for the third straight day. Among the main sectors, utilities led the declines, while energy shares followed oil prices higher.
The Dow Jones Industrial Average DJIA, -0.06% edged down 17 points, or 0.1%, to 17,234, while the Nasdaq Composite COMP, +0.12% declined 5 points, or 0.1%, to 4,723.
Other markets: Global equity markets were trading lower despite a jump in oil futures CLJ6, +2.89% after an encouraging report on inventories from an industry group and reports of a meeting next month among crude producers.
European stocks SXXP, -0.13% dipped, while Asian markets closed mixed. Gold futures GCJ6, -0.02% and a key dollar index DXY, +0.38% both advanced.
Economic news: Federal Reserve policy makers are expected to wrap up a two-day meeting and make an announcement at 2 p.m. Eastern Time. The CME Group’s FedWatch tool gives a 0% chance of an interest-rate hike. That puts the focus squarely on Fed chief Janet Yellen’s news conference, slated for 2:30 p.m. Eastern.
Yellen and her colleagues are “not expected to raise rates this meeting, but with inflation pressures growing and the U.S. economy still strong, the Fed is likely to use the statement, forecasts and press conference to signal another hike is likely in the spring,” said Colin Cieszynski, chief market strategist at CMC Markets, in a note.
Hawkish comments could lift the dollar and “send stocks initially lower, then higher, as a signal of tighter monetary policy driven by a stronger economy,” he added.
Among the day’s data, core consumer prices, which exclude volatile food and energy, rose last month and are up 2.3% over the past 12 month. Meanwhile, construction on new houses rose in February to a five-month high, led by the biggest increase in single-family units in nine years.
Industrial production decreased 0.5% in February, after hopeful signs of stabilization in January.
