Stocks Seeing Modest Weakness Ahead Of Fed Announcement - U.S. Commentary

(RTTNews) - While selling pressure has remained subdued, stocks are seeing modest weakness in mid-day trading on Wednesday. Traders seem reluctant to make significant moves ahead of the Federal Reserve's monetary policy announcement.

Currently, the major averages remain just below the unchanged line. The Dow is down 37.76 points or 0.2 percent at 16,770.73, the Nasdaq is down 5.29 points or 0.1 percent at 4,331.95 and the S&P 500 is down 0.78 points or less than a tenth of a percent at 1,941.21.

Traders have mostly remained on the sidelines ahead of the announcement from the Fed, which is scheduled to be released at about 2 pm ET.

The Fed is likely to leave interest rates unchanged, but 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 Endocyte (ECYT) have 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.

Furniture maker La-Z-Boy (LZB) has also moved to the downside after reporting weaker than expected fourth quarter revenues.

On the other hand, shares of Adobe Systems (ADBE) have moved sharply higher after the software developer reported better than expected second quarter results.

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

Sector News

Despite the modest weakness being shown by the broader markets, significant strength has emerged among gold stocks. The NYSE Arca Gold Bugs Index has advanced by 1.4 percent, reaching its best intraday level in a month.

The strength among gold stocks comes despite a modest decrease by the price of the precious metal, with gold for August delivery slipping $0.30 to $1,271.70 an ounce.

Trucking stocks are also seeing considerable strength on the day, resulting in a 1.1 percent gain by the Dow Jones Trucking Index. With the gain, the index is on pace to end the session at a record closing high.

Electronic storage and utilities stocks are also seeing some strength in mid-day trading, while weakness is visible among housing, semiconductor, and networking stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Wednesday. Japan's Nikkei 225 Index advanced by 0.9 percent, while China's Shanghai Composite Index fell to by 0.5 percent.

The major European markets also turned mixed on the day. While the French CAC 40 Index edged down by 0.1 percent, the German DAX Index and the U.K.'s FTSE 100 Index rose by 0.1 percent and 0.2 percent, respectively.

In the bond market, treasuries are seeing modest strength after moving notably lower over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.2 basis points at 2.633 percent.