Stocks Lower Ahead of Fed Meeting

Stocks Lower Ahead of Fed Meeting

NEW YORK (AP) -- U.S. stock indexes slipped Wednesday morning as investors wait for what's expected to be one of the most telegraphed rate increases in history.

The Federal Reserve is wrapping up a policy meeting this afternoon, and virtually all of Wall Street is forecasting it will raise short-term rates by a quarter of a percentage point. It would be the second rate increase in a year and just the second in a decade.

KEEPING SCORE: The Standard & Poor's 500 index fell 3 points, or 0.2 percent, to 2,267 as of 10 a.m. Eastern time. The Dow Jones industrial average fell 35 points, or 0.2 percent, to 19,876. The Dow came close to breaching the 20,000 level for the first time on Tuesday. The Nasdaq composite fell 3 points, or 0.1 percent, to 5,460.

CENTRAL BANK MEETING: The Fed has kept short-term interest rates close to zero since the Great Recession in hopes of driving economic growth and averting a downward spiral in prices, a condition that economists call deflation.

The strengthening job market means investors see it as a nearly foregone conclusion that the Fed will announce a rate increase this afternoon. Perhaps more important will be clues about what the Fed sees for the future.

Many investors are forecasting the Fed will raise rates one or two more times in 2017. It's walking a delicate balance: Higher interest rates make borrowing more expensive, which can slow corporate profits and economic growth, but one of the worst-case scenarios for the economy would be if inflation raced higher because the Federal Reserve was too slow to raise rates.

SPLIT STOCK MARKET: The 11 sectors that make up the S&P 500 were nearly evenly split between winners and losers. Health care stocks rose 0.5 percent to lead the five up sectors. Energy fell 0.9 percent, most among the six down sectors.

Roughly three stocks fell for every two that rose on the New York Stock Exchange.

BOND YIELDS: The yield on the 10-year Treasury note fell to 2.43 percent from 2.47 percent late Tuesday, a reversal from its upward trend over the last month. Interest rates have been climbing since the U.S. presidential election on expectations that inflation and economic growth may be heading higher.

ECONOMIC DATA: Reports released Wednesday offered a mixed picture of the U.S. economy. Retail sales edged up by just 0.1 percent in November, a weaker showing than economists expected.

Inflation at the wholesale level was higher than expected last month, though economists said it still looks fairly tame, while industrial production weakened.

GLOBAL MARKETS: In Europe, Britain's FTSE 100 dipped 0.1 percent, while Germany's DAX slipped 0.2 percent and France's CAC 40 lost 0.5 percent.

In Asia, Japan's Nikkei 225 finished nearly unchanged at 19,253.61, just a titch above its one-year high close on Tuesday. South Korea's Kospi and Hong Kong's Hang Seng index also were up marginally.

COMMODITIES: Benchmark U.S. crude fell 78 cents, or 1.5 percent, to $52.21 per barrel in New York. Brent crude, the international standard, lost 83 cents to $54.89 a barrel in London. Gold rose $6.80, or 0.6 percent, to $1,165.80 per ounce. Silver rose 1.1 percent, and copper added 0.2 percent.

CURRENCIES: The dollar was little changed against many of its rivals. It was virtually flat against the euro and Japanese yen. The British pound rose to $1.2703 from $1.2667.