Stocks retreat as market waits for Fed decision

By Ken Sweet

Associated Press

Published: Wednesday, Sept. 18 2013 10:37 a.m. MDT

Specialist Thomas Facchine, center, calls out opening prices during the IPO of Mexican airline Volaris, on the floor of the New York Stock Exchange, Wednesday, Sept. 18, 2013. Stocks were little changed in early trading Wednesday as investors wait to hear from the Federal Reserve on the fate of the central bank's bond-buying program.

Richard Drew, Associated Press

NEW YORK — Stocks edged lower in midday trading Wednesday as investors waited to hear from the Federal Reserve on the fate of the central bank's bond-buying program.

The Dow Jones industrial average lost 51 points, or 0.3 percent, to 15,477 as of noon Eastern time. The Standard & Poor's 500 index was down four points, or 0.2 percent, to 1,700. The Nasdaq composite index fell seven points, or 0.2 percent, to 3,738.

Investors have been waiting to hear the Fed's decision regarding its economic stimulus ever since Fed Chairman Ben Bernanke said in June that the central bank was considering pulling back.

"This is probably the most widely anticipated Fed meeting in years," said Alec Young, global equity strategist at S&P Capital IQ.

The Federal Reserve has been buying bonds since 2008 in an effort to keep interest rates low and keep the economy growing. The most recent version of the program started in September 2012, when the central bank voted to buy $40 billion a month in Treasuries and other securities. The Fed voted to increase that program to $85 billion a month in December.

While the reaction to Bernanke's comments in June from the market was shock, investors have become increasingly comfortable with the idea that the economy is strong enough to handle the Fed slowly stopping its bond purchases.

Major U.S. stock indexes are up roughly 4.5 percent this month alone, and the S&P 500 is within eight points of its all-time high of 1,709. The benchmark 10-year Treasury note has been relatively stable as well, trading at a yield of 2.88 percent, after hitting 3 percent at the beginning of the month.

Investors expect the Fed will announce a slight reduction of around $10 billion a month in bond purchases. Many economists think the Fed has done enough to stimulate the economy, and Fed officials have made various comments throughout the summer to prepare investors for a modest and gradual reduction.

In corporate news, FedEx added $3.26, or 2.9 percent, to $113.80 after reporting earnings of $489 million, or $1.53 per share, in the quarter ended Aug. 31. That's up from $1.45 per share a year ago, and beat analysts' forecast of $1.50 per share. Revenue rose 2 percent to $11.02 billion, just above analysts' forecast of $11.00 billion.

Adobe Systems gained $3.06, or 6.5 percent, to $51.21 after the company said it added more subscribers to its "Creative Cloud" software service than previously anticipated.

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