Wall St. dips after recent rally as Fed statement looms

By Alison Griswold

NEW YORK (Reuters) - Stocks were little changed on Wednesday before the Federal Reserve releases a statement which could provide clues about the Fed's future stimulus efforts, a key to the market's continued rally.

The Fed will release a policy statement at 2 p.m., which will sum up policymakers' views on the economic outlook and may also shed light on when the Fed might scale back its bond-buying, meant to stimulate growth and bolster the shaky job market.

Chairman Ben Bernanke will hold a news conference beginning at 2:30 p.m. He is likely to be asked about the timeline for winding down bond purchases, about inflation that is below the Fed's target and his views on being reappointed Fed chairman after his term expires in 2014.

The S&P 500 has regained some losses in the last few days as confidence increased that the Fed will leave the current stimulus in place even if Bernanke nods at the need to begin reducing bond purchases later in the year.

Seth Setrakian, partner and co-head of U.S. equities at First New York Securities, said the market is changing little before the results of the Fed's two-day meeting.

"It would be suicide to take big exposure or lean one way or the other because I think the reaction is going to be very binary: accommodative or not accommodative," he said.

The expectation is that the Fed will maintain its $85 billion per month in bond purchases, with policymakers leaving their options open for scaling back later this year if the U.S. labor market continues to improve.

The stimulus helped the stock market reach record highs on May 21, one day before Bernanke said the Fed could reduce its bond-buying in the "next few meetings" if the economy gained momentum. His comments rocked markets, boosting bond yields and halting stocks' rally.

Despite the increased volatility of the past month, the market has moved largely sideways. The S&P 500 closed on Tuesday just 1 percent below its record high of 1,669.16 on May 21.

The Dow Jones industrial average <.dji> was down 8.79 points, or 0.06 percent, at 15,309.44. The Standard & Poor's 500 Index <.spx> was down 0.95 point or 0.06 percent, at 1,650.86. The Nasdaq Composite Index <.ixic> was down 0.10 point at 3,482.08.

U.S. wireless provider Sprint Nextel was the most heavily traded stock on the New York Stock Exchange, falling 3 percent to $7.09. Japan's SoftBank cleared a major hurdle in its attempt to buy Sprint as rival bidder Dish Network declined to make a new offer after SoftBank sweetened its own bid last week.

Shares of Adobe Systems Inc rose 6.5 percent to $46.19 a day after the maker of Photoshop and Acrobat software reported a higher-than-expected adjusted quarterly profit and said demand rose for Creative Cloud, the subscription-based version of its flagship software package.

FedEx Corp reported higher quarterly profit than expected as its ground shipment business improved. It also said jet fuel prices dropped. Shares were up 3.7 percent at $103.20.

Among the most actively traded shares on the Nasdaq were the when-issued shares of News Corp , which represent preliminary trading in the company. It is scheduled to be split from its Fox unit at the end of June. More than 20 million shares traded in the stock, which last traded at $15.91 a share.

(Reporting By Alison Griswold; Additional reporting by Rodrigo Campos; Editing by Kenneth Barry)

Source: http://news.yahoo.com/stock-futures-little-changed-fed-statement-looms-114433816.html

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