Wall Street falls ahead of Fed statement, Yellen comments

 

Reuters

By Rodrigo Campos

NEW YORK (Reuters) – U.S. stocks fell on Wednesday ahead of a highly anticipated statement and news conference by the Federal Reserve later in the session, with the Fed seen giving clearer clues on how soon it plans to tighten monetary policy.

Shares were off their lows as utilities, expected to suffer if interest rates rise, and energy companies, recently hurt by lower crude prices, were the unexpected leaders of the session.

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.

“There’s not much of a move really; it’s more stock-specific and the market is basically in wait-and-see mode,” said Richard Sichel, chief investment officer at Philadelphia Trust Co.

“If the Fed is more hawkish hopefully investors could see that as a sign the economy is doing well.”

At 12:19 p.m. EDT (1619 GMT) the Dow Jones industrial average (.DJI) fell 105.58 points, or 0.59 percent, to 17,743.5, the S&P 500 (.SPX) lost 8.32 points, or 0.4 percent, to 2,065.96 and the Nasdaq Composite (.IXIC) dropped 13.19 points, or 0.27 percent, to 4,924.24.

U.S. crude (CLc1) fell for a seventh straight session, hitting a fresh six-year low at $42.03 per barrel. It was last down 2.6 percent at $42.33. The S&P 500 energy sector (.SPNY) however was up 0.4 percent and is on track to post its first positive week in five.

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 $84.43 on nearly twice the average volume of the past five sessions.

FedEx (FDX.N) shares fell 2.3 percent to $171.64 after the package delivery company forecast full-year profit below analyst estimates.

Oracle (ORCL.N) rose 2.6 percent to $43.97 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.