Wall Street Drifts Ahead of Fed Decision

NEW YORK (AP) -- Stocks drifted in morning trading on Wall Street Wednesday as markets wait for the Federal Reserve's latest announcement on interest rate policy and guidance on the timing and size of potential rate cuts later this year.

The S&P 500 was mostly unchanged and is coming off a record high. The Dow Jones Industrial Average was up 6 points, or less than 0.1% and the Nasdaq composite fell 0.1% as of 10:46 a.m. Eastern.

Treasury yields held relatively steady in the bond market.

Mexican food chain Chipotle surged 6% after announcing a stock split, the first in its history. Cheerios maker General Mills jumped 2.2% after reporting financial results that easily beat analysts' forecasts.

The Fed began its latest meeting on interest rates on Tuesday and will announce its decision later Wednesday. The widespread expectation is for the central bank to leave its main interest rate alone at a two-decade high. Investors are hoping the Fed will indicate it still expects to cut rates three times later this year, as it hinted a few months ago.

Stocks have been rallying to records amid hopes that the Fed is moving closer to cutting interest rates, which would relieve pressure on the economy and financial system. Wall Street is betting that the central bank will begin cutting its benchmark interest rate at its meeting in June.

The central bank started raising interest rates in 2022 in an effort to tame inflation back to its target of 2%. Inflation has broadly cooled since then, with consumer prices falling to a rate of 3.2% in February from as high as 9.1% in the middle of 2022. At the same time, consumers kept spending and the economy grew, despite worries that such severe interest rate increases could cause a recession.

Wall Street has been worried about the challenges the Fed faces in further easing inflation from here. Recent reports on inflation have consistently been coming in worse than expected, however. That has raised concerns about the Fed moving ahead with fewer rate cuts this year. The central bank will get another inflation update next week with February data for its preferred measure that focuses on personal consumption and expenditures.

Markets in Europe and Asia were mixed. Japan's markets were closed for a holiday a day after the Bank of Japan hiked its benchmark interest rate for the first time in 17 years, raising the rate to a range of zero to 0.1% from minus 0.1%.

The FTSE 100 in London rose 0.1% after British inflation in February came in below expectations at 3.4%, marking its lowest level since September 2021. That supports hope for rate cuts in coming months.