NEW YORK (AP) -- Stocks fell in early trading Wednesday as investors held back ahead of an anticipated decision by the Federal Reserve to cut interest rates.
The central bank has been using its power to cut short-term interest rates as a way to shore up the economy amid the costly impact from the U.S.-China trade war. It has already cut rates twice since this summer. Investors will also listen closely for any clues about the Fed's future plans as it monitors lingering economic threats.
Banks fell broadly ahead of the expected rate cut and as bond yields dipped. Lower yields and interest rates make it more difficult for companies like Bank of America and JPMorgan to increase profits from loans.
Energy stocks, including Valero and Hess, also fell.
Johnson & Johnson was a standout with a gain of 3.2%. That helped the broader health care sector hold on to modest gains.
Consumer product makers and utilities held up better than most as investors shifted to the safe-play sectors. The yield on the 10-year Treasury fell to 1.81% from 1.83% late Tuesday.
KEEPING SCORE: The S&P 500 index rose 0.1% as of 10 a.m. Eastern time. The Dow Jones Industrial Average fell 5 points, or less than 0.1%, to 27,064. The Nasdaq fell 0.2%. The Russell 2000 index of smaller company stocks fell 0.6%.
FED WATCH: Analysts are forecasting that the Fed will reduce short-term interest rates, which influence a broad range of consumer and business loans, by one-quarter percentage point to a range of 1.5% to 1.75%. It would mark the third such cut in 2019 and nearly reverse the four rate hikes that the Fed made last year.
Rising global risks led the Fed to change course and begin easing credit. Lower rates are intended to encourage more borrowing and spending. Fed Chairman Jerome Powell has said that the central bank's rate reductions are intended as a kind of insurance against threats to the economy.
MIDWEEK MOVEMENT: The early losses on Wednesday extend Tuesday's slight pullback. The decline is an about-face from Monday's rally, which pushed the S&P 500 to a record high close.
Investors have been focusing on a steady flow of corporate earnings, along with key economic reports. Apple, Facebook and Starbucks will report their earnings later Wednesday.
GOOD ENOUGH GROWTH: The U.S. economy slowed to a modest growth rate of 1.9% in the July-September quarter, but still surpassed economists' forecasts for even weaker growth. The Commerce Department reported that consumer spending downshifted and businesses continued to trim their investments in response to trade war uncertainty and a weakening global economy.
Gross domestic product, which is the economy's total output of goods and services, grew at a 2% rate in the second quarter.
PLAYING NICELY: Mattel surged 21% after the toy maker breezed past Wall Street's third-quarter profit forecasts on strong sales of its Barbie and Hot Wheels brands. The company also put investors at ease when it said that it hasn't seen any impact from tariff increases on toys imported from China ahead of the Dec. 15 deadline.
Key rival Hasbro said last week that the trade war is wreaking havoc on the company's supply chain and creating confusion among retail customers for its toys.
CASH FLOW JOLT: General Electric jumped 12.7% after the industrial conglomerate raised its projections for a key measure of profitability despite a damaging trade fight and ongoing problems with Boeing's 737 Max, which GE helps make engines for.
OVERSEAS: European markets fell. Britain will hold an early election, in December, as politicians continue to debate over the nation's stalled departure for the European Union. The trading block recently gave Britain a three-month extension to Jan. 31 for its pending departure. Asian markets also fell.