NEW YORK—U.S. stocks pushed lower as investors waited to see whether the Federal Reserve would decide to maintain the pace of its bond-buying program at the conclusion of its policy meeting later today.
The Dow Jones Industrial Average declined 16 points, or 0.1%, to 5859. It was up 64 points at its session high. The S&P 500-stock index shed seven points, or 0.4%, to 1774. The Nasdaq Composite Index lost 33 points, or 0.8%, to 3990.
The outcome of the Fed meeting is expected to remain in focus for most of the session Wednesday. Investors are zeroed in on whether the central bank will start to taper its $85 billion of monthly bond purchases, which have been intended to spur economic growth. The Fed decision is due at 2 p.m. EST, with a news conference to follow at 2:30 p.m.
“Everybody just wants some clarity,” said Mark Freeman, chief investment officer at Westwood Holdings Group, which manages roughly $17 billion. “We’ll get some, but…what do you do with it?”
Markets have swung in recent weeks as traders and investors have tried to determine the outlook for Fed action this month. Stocks fell last week, with markets notching their largest single-day decline in a month in one session, on expectations that the Fed could decide to taper this month.
But last week’s losses followed a rally on a better-than-expected November government jobs report. The Fed has said it would watch the labor market closely to determine whether the economy is strong enough for it to take a step back. The S&P 500 is now up 0.2% so far this week.
It isn’t clear how markets will react to any move—or a signal of any future moves—from the Fed. Mr. Freeman said he would be “surprised” if the Fed moves to cut its bond purchases after its meeting today.
Still, he said, the firm isn’t planning any big moves that would depend on the Fed’s decision. He said that the fund has already adjusted its holdings in anticipation of rising interest rates. He said he is focusing on shares of companies that have good prospects for growing sales, room to improve operating margins and strong free cash flow.
“I don’t know what the Fed is going to do, I don’t know when they’re going to do it, but with companies like that it doesn’t matter,” Mr. Freeman said.
Treasury prices fell ahead of the Fed decision, with the yield on the 10-year note rising to 2.891%. Rates have risen this year in anticipation of the central bank stepping back from bond buying, with a sharp rise in early summer.
Wednesday brought signs that the housing industry is adjusting to rising interest rates, however, as new-home construction jumped by more than expected in November. The Commerce Department reported that U.S. housing starts rose to a seasonally adjusted annual rate of 1,091,000, its highest level in nearly six years. November building permits, an indicator of future construction, fell by 3.1%, a smaller drop than expected, to 1,007,000.
Gold futures were little changed, moving less than 0.1% to $1,229.90 a troy ounce, while crude-oil futures were 0.1% higher at $97.58 a barrel. The dollar was nearly unchanged against the euro and edged higher against the yen.
Meanwhile, European stocks were broadly higher, with the Stoxx Europe 600 index up 0.8%. Germany’s DAX added 1% amid further signs of strength for Europe’s largest economy. The Ifo institute’s business-confidence index climbed to 109.5 from 109.3 in November, hitting its highest level since April 2012 and matching economists’ forecasts.
The U.K.’s FTSE 100 gained 0.2%, after a decline in U.K. unemployment to 7.4% in the three months to October–its lowest level in 4½ years. Economists had forecast a rate of 7.6%.
Asian markets provided a positive backdrop, as strong Japanese export data spurred a 2% gain for Tokyo’s Nikkei index. The yen’s decline against the dollar came amid speculation that Prime Minister Shinzo Abe might make a growth-strategy announcement in a speech Thursday.
Hong Kong’s Hang Seng Index rose 0.3%, while the Shanghai Composite lost 0.1%.
In corporate news, FedEx edged down after reporting fiscal second-quarter profit that missed Wall Street forecasts. The shipping giant raised its full-year forecast for adjusted earnings, in part to account for recent share purchases.
VeriFone Systems fell after the card-payment system maker reported earnings late Tuesday that missed analyst estimates.
Heico gained after the aircraft-components maker beat analyst forecasts for its earnings and revenue, and gave an upbeat outlook for the new fiscal year.
Write to Alexandra Scaggs at [email protected]
The Dow Jones Industrial Average declined 16 points, or 0.1%, to 5859. It was up 64 points at its session high. The S&P 500-stock index shed seven points, or 0.4%, to 1774. The Nasdaq Composite Index lost 33 points, or 0.8%, to 3990.
The outcome of the Fed meeting is expected to remain in focus for most of the session Wednesday. Investors are zeroed in on whether the central bank will start to taper its $85 billion of monthly bond purchases, which have been intended to spur economic growth. The Fed decision is due at 2 p.m. EST, with a news conference to follow at 2:30 p.m.
“Everybody just wants some clarity,” said Mark Freeman, chief investment officer at Westwood Holdings Group, which manages roughly $17 billion. “We’ll get some, but…what do you do with it?”
Markets have swung in recent weeks as traders and investors have tried to determine the outlook for Fed action this month. Stocks fell last week, with markets notching their largest single-day decline in a month in one session, on expectations that the Fed could decide to taper this month.
But last week’s losses followed a rally on a better-than-expected November government jobs report. The Fed has said it would watch the labor market closely to determine whether the economy is strong enough for it to take a step back. The S&P 500 is now up 0.2% so far this week.
It isn’t clear how markets will react to any move—or a signal of any future moves—from the Fed. Mr. Freeman said he would be “surprised” if the Fed moves to cut its bond purchases after its meeting today.
Still, he said, the firm isn’t planning any big moves that would depend on the Fed’s decision. He said that the fund has already adjusted its holdings in anticipation of rising interest rates. He said he is focusing on shares of companies that have good prospects for growing sales, room to improve operating margins and strong free cash flow.
“I don’t know what the Fed is going to do, I don’t know when they’re going to do it, but with companies like that it doesn’t matter,” Mr. Freeman said.
Treasury prices fell ahead of the Fed decision, with the yield on the 10-year note rising to 2.891%. Rates have risen this year in anticipation of the central bank stepping back from bond buying, with a sharp rise in early summer.
Wednesday brought signs that the housing industry is adjusting to rising interest rates, however, as new-home construction jumped by more than expected in November. The Commerce Department reported that U.S. housing starts rose to a seasonally adjusted annual rate of 1,091,000, its highest level in nearly six years. November building permits, an indicator of future construction, fell by 3.1%, a smaller drop than expected, to 1,007,000.
Gold futures were little changed, moving less than 0.1% to $1,229.90 a troy ounce, while crude-oil futures were 0.1% higher at $97.58 a barrel. The dollar was nearly unchanged against the euro and edged higher against the yen.
Meanwhile, European stocks were broadly higher, with the Stoxx Europe 600 index up 0.8%. Germany’s DAX added 1% amid further signs of strength for Europe’s largest economy. The Ifo institute’s business-confidence index climbed to 109.5 from 109.3 in November, hitting its highest level since April 2012 and matching economists’ forecasts.
The U.K.’s FTSE 100 gained 0.2%, after a decline in U.K. unemployment to 7.4% in the three months to October–its lowest level in 4½ years. Economists had forecast a rate of 7.6%.
Asian markets provided a positive backdrop, as strong Japanese export data spurred a 2% gain for Tokyo’s Nikkei index. The yen’s decline against the dollar came amid speculation that Prime Minister Shinzo Abe might make a growth-strategy announcement in a speech Thursday.
Hong Kong’s Hang Seng Index rose 0.3%, while the Shanghai Composite lost 0.1%.
In corporate news, FedEx edged down after reporting fiscal second-quarter profit that missed Wall Street forecasts. The shipping giant raised its full-year forecast for adjusted earnings, in part to account for recent share purchases.
VeriFone Systems fell after the card-payment system maker reported earnings late Tuesday that missed analyst estimates.
Heico gained after the aircraft-components maker beat analyst forecasts for its earnings and revenue, and gave an upbeat outlook for the new fiscal year.
Write to Alexandra Scaggs at [email protected]