Stocks May Open Roughly Flat As Fed Decision Looms - U.S. Commentary

(RTTNews) - With traders looking ahead to the Federal Reserve's monetary policy announcement, stocks may show a lack of direction in early trading on Wednesday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures up by just 2 points.

Traders are likely to remain on the sidelines in the lead-up to the announcement from the Fed, which is scheduled to be released at about 2 pm ET.

While the Fed is likely to leave interest rates unchanged, the central bank is widely expected to announce another $10 billion reduction in the pace of asset purchases to $35 billion per month.

The impact to the markets is more likely to stem from the language of the accompanying statement as well as any changes to the outlook for the economy and interest rates.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "The bottom line with the Fed today is to what extent they alter their predictions and acknowledge that things are happening at a faster pace than they previously estimated."

"If members predicted the first rate hike in the middle of 2015 under previous assumptions, what will they think today under new ones? Their credibility is on the line if they ignore that the facts are now different," he added.

Not long after the announcement, Fed Chair Janet Yellen is scheduled to hold a press conference to discuss the decision.

Yellen may be more cautious than during her first post-meeting press conference, when she triggered a sell-off on Wall Street by suggesting that interest rates might be raised sooner than anticipated.

Among individual stocks, shares of Adobe Systems (ADBE) are moving sharply higher in pre-market trading after the software developer reported better than expected second quarter results.

Delivery giant FedEx (FDX) is also likely to see early strength after reporting fourth quarter earnings that exceeded estimates. The company also said it is well positioned for a strong fiscal 2015.

On the other hand, shares of Endocyte (ECYT) are likely to come under pressure after the biopharmaceutical company said a Merck (MRK) subsidiary decided that it will no longer pursue development of its cancer drug vintafolide.

After coming under pressure at the start of trading on Tuesday, stocks moved modestly higher over the course of the trading day. The gains on the day extended the moderate upward move seen in the two previous sessions.

While buying interest was somewhat subdued, the major averages all closed in positive territory. The Dow edged up 27.48 points or 0.2 percent to 16,808.49, the Nasdaq rose 16.13 points or 0.4 percent to 4,337.23 and the S&P 500 crept up 4.21 points or 0.2 percent to 1,941.99.