Wall Street treads water as investors await Fed decision

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By Tanya Agrawal
Wall Street opened little changed on Wednesday, a day after all three major indexes hit record highs, as investors awaited the outcome of the U.S. Federal Reserve’s meeting.

The Fed is widely tipped to lift rates 25 basis points to 0.50-0.75 percent. The announcement is due at 2 p.m. ET (1900 GMT), followed by Chair Janet Yellen’s news conference 30 minutes later.

Market participants will be paying close attention to Yellen’s tone and new forecasts, seeking clues on policymakers’ thinking on how President-elect Donald Trump’s policies will impact growth and inflation.

However, concerns over a strengthening dollar linger with the dollar index .DXY, which measures the greenback against a basket of six major currencies, hitting 14-year peaks last month.

“Markets are acting like a zombie today ahead of the Fed decision,” said Naeem Aslam, chief market analyst at Think Markets.

“It is not that they are not expecting a rate hike from the Fed, it is the element of the unknown which Yellen would deliver in her statement.”

At 9:37 a.m. ET the Dow Jones industrial average .DJI was up 0.26 points, or 0 percent, at 19,911.47, the S&P 500 .SPX was up 0.47 points, or 0.020689 percent, at 2,272.19 and the Nasdaq Composite .IXIC was up 7.65 points, or 0.14 percent, at 5,471.48.

Six of the 11 major S&P sectors were lower, with the financial index’s .SPSY 0.91 percent fall leading the decliners.

Wells Fargo (WFC.N) fell 2.5 percent to $54.43 after the bank’s “living will” failed U.S. regulators’ assessment for a second time this year.

Oil prices fell about 2 percent as glut worries resurfaced after a reported rise in U.S. crude inventories.

U.S. stocks hit new all-time highs on Tuesday and the Dow Jones industrial average ended fewer than 100 points away from the 20,000 mark as a post-election rally showed no signs of fatigue.

The Dow has climbed about 9 percent since the Nov. 8 election, with gains fueled by expectations that Trump will reduce taxes and regulation and stimulate the economy.

“I don’t think the Dow is an indicator of anything because it’s such a small sample and the way in which the index is constructed,” said Patrick Kaser, portfolio manager at Brandywine Global.

“But that said, right now we’ve been in a month of bullishness and optimism and so the mood will swing to skepticism as we wait for actual policies to come out.”

Meanwhile, U.S. retail sales barely rose in November as households cut back on purchases of motor vehicles. The Commerce Department said retail sales edged up 0.1 percent. Economists had forecast overall retail sales increasing 0.3 percent.

In a separate report, the Labor Department said its producer price index for final demand increased 0.4 percent last month, the largest gain since June, after being unchanged in October.

General Motors (GM.N) fell 2.5 percent to $36.40 and Ford (F.N) declined 1.3 percent to $12.59 following a report that China will soon slap a penalty on an unnamed U.S. automaker for monopolistic behavior.

Hertz Global (HTZ.N) dropped 1.4 percent to $24.80 after the car rental company said on Tuesday it would replace its chief executive and reduce its board size.

Declining issues outnumbered advancers on the NYSE by 1,445 to 1,133. On the Nasdaq, 1,227 issues fell and 1,028 advanced.

The S&P 500 index showed six new 52-week highs and no new lows, while the Nasdaq recorded 26 new highs and six new lows.

(Reporting by Tanya Agrawal; Editing by Sriraj Kalluvila)

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