Wall Street drops with Eyes on Fed Statement

U.S. stocks fell in early trading on Wednesday ahead of a highly anticipated statement and news conference by the Federal Reserve later in the session, with the Fed expected to give clearer clues on how soon it plans to tighten monetary policy.

The U.S. central bank is expected to provide indications on the timing of its first interest rate hike in nearly a decade, as its two-day meeting ends later in the day. The Fed is assessing if the U.S. economic recovery can hold up against collapsing oil prices and a soaring dollar.

A statement is due at 2:00 p.m. EDT (1800 GMT), with a press conference by Fed Chair Janet Yellen half an hour later.

The U.S. dollar has strengthened against most major currencies as central banks around the world ease monetary policy while the Fed is on track to tighten.

“It’s mostly posturing ahead of the Fed,” said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.

“I think the (stock) market is going to have trouble with interest rates the rest of the year.”

U.S. crude CLc1 fell for a seventh straight session, hitting a fresh six-year low at $42.05 per barrel. It was last down 2.7 percent at $42.27. The S&P 500 energy sector .SPNY slipped 0.3 percent.

“Oil might be pressuring things a little bit,” said Paulsen. “There’s a lot in there for the market to be very volatile today.”

At 10:00 a.m. EDT (1400 GMT), the Dow Jones industrial average .DJI fell 96.82 points, or 0.54 percent, to 17,752.26, the S&P 500 .SPX lost 8.34 points, or 0.4 percent, to 2,065.94 and the Nasdaq Composite .IXIC dropped 13.76 points, or 0.28 percent, to 4,923.68.

A lock-up period in Alibaba (BABA.N) shares expires Wednesday, with a larger one expiring in September. The stock hit a high of $120 in November and closed Tuesday at $84.50, about 24 percent above its IPO price. Shares were little changed at $84.31 after a small premarket decline.

FedEx (FDX.N) shares fell 2.3 percent to $171.61 after the package delivery company forecast full-year profit below analyst forecasts.

Oracle (ORCL.N) rose 4.3 percent to $44.71 a day after it posted flat third-quarter revenue and slightly lower profit. However, it raised its quarterly dividend 25 percent to 15 cents a share.

Declining issues outnumbered advancing ones on the NYSE by 1,785 to 939, for a 1.90-to-1 ratio on the downside; on the Nasdaq, 1,428 issues fell and 892 advanced for a 1.60-to-1 ratio favoring decliners.

The benchmark S&P 500 index was posting 15 new 52-week highs and 4 new lows; the Nasdaq Composite was recording 53 new highs and 23 new lows.

Source: Reuters