Adam Sarhan MarketWatch Quote: U.S. stocks down a bit; Wall Street waits for Fed
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks fell slightly on Wednesday after a two-day rally, with investors reluctant to make any big moves ahead of the Federal Reserve’s policy decision later in the day.
“My expectation is we will sit in a sideways holding pattern until the Fed announcement,” said Randy Frederick, managing director of active trading and derivatives at Charles Schwab. “They’ll probably be the typical knee-jerk reactionwhen it happens, and if there’s something unexpected, it could go sharply in one direction and then immediately reverse in the other direction.”
But like most strategists, Frederick does not believe the monetary-policy decision from the Federal Open Market Committee or the news conference by Fed Chairman Ben Bernanke will signal any change.
“They try the Federal Open Mouth Policy; they try to talk in a hawkish manner but their actions will be dovish,” said Jack Ablin, chief investment officer at BMO Private Bank.
The Dow Jones Industrial AverageDJIA -0.12% declined 14.97 points, or less than 0.1%, to 15,303.26.
The S&P 500 index SPX -0.10% fell 1.63 points, or 0.1%, to 1,650.18, with telecommunications pacing declines and materials up the most, among its 10 major sectors.
Shares of FedEx Corp. FDX +2.55% rose 2.4% after the airfreight company reported a better-than-expected profit.
Adobe Systems Inc. ADBE +6.64% climbed 6.4% a day after the design-software maker reported second-quarter profit that beat expectations.
Tesla Motors Inc. TSLA +1.28% jumped 1.6%. The electric-car maker late Tuesdaysaid it was recalling some of its 2013 Model S cars due to a mounting defect involving rear seats.
Sprint Nextel Corp. S -3.14% declined 3% after Dish Network Corp. DISH +2.42%opted to not hike its bid for the wireless carrier.
The Nasdaq Composite COMP -0.22% lost 5.72 points, or 0.2%, to 3,476.44.
For every stock rising, nearly two fell on the New York Stock Exchange, where 246 million shares traded as of 1 p.m. Eastern.
Composite volume surpassed 1.4 billion.
Treasury prices fell, with the yield on the 10-year note 10_YEAR +0.96% used in setting mortgage rates and other consumer loans rising to 2.229%.
The U.S. dollar DXY -0.22% edged down against other currencies including the yenUSDJPY -0.11% .
On the New York Mercantile Exchange, gold prices GCQ3 +0.39% gained to $1,373.20 an ounce and crude oil CLN3 -0.11% declined four cents to $98.40 a barrel.“All this talk about tapering is a little premature. The market knows this and that’s why we have been rallying for the past few days,” said Adam Sarhan, chief executive at Sarhan Capital.
That said, if Fed officials open the door to tapering on Wednesday, “markets could react poorly,” Sarhan added.
The FOMC resumed its two-day meeting on Wednesday, with a monetary-policy announcement due at 2 p.m. Eastern time. Bernanke is scheduled to start his news conference 30 minutes later. Read about seven charts that tell the Fed not to taper QE3
“The market is trying to position itself for a less-active Fed, and maybe a more normalized interest-rate environment,” said Frederick of the market’s volatile state, in display ever since Bernanke indicated in testimony to Congress four weeks ago that the central bank might begin scaling back its bond purchases should the economy show sustainable improvement.
“My expectation is we will sit in a sideways holding pattern until the Fed announcement,” said Randy Frederick, managing director of active trading and derivatives at Charles Schwab. “They’ll probably be the typical knee-jerk reactionwhen it happens, and if there’s something unexpected, it could go sharply in one direction and then immediately reverse in the other direction.”
But like most strategists, Frederick does not believe the monetary-policy decision from the Federal Open Market Committee or the news conference by Fed Chairman Ben Bernanke will signal any change.
“They try the Federal Open Mouth Policy; they try to talk in a hawkish manner but their actions will be dovish,” said Jack Ablin, chief investment officer at BMO Private Bank.
The Dow Jones Industrial AverageDJIA -0.12% declined 14.97 points, or less than 0.1%, to 15,303.26.
The S&P 500 index SPX -0.10% fell 1.63 points, or 0.1%, to 1,650.18, with telecommunications pacing declines and materials up the most, among its 10 major sectors.
Shares of FedEx Corp. FDX +2.55% rose 2.4% after the airfreight company reported a better-than-expected profit.
Adobe Systems Inc. ADBE +6.64% climbed 6.4% a day after the design-software maker reported second-quarter profit that beat expectations.
Tesla Motors Inc. TSLA +1.28% jumped 1.6%. The electric-car maker late Tuesdaysaid it was recalling some of its 2013 Model S cars due to a mounting defect involving rear seats.
Sprint Nextel Corp. S -3.14% declined 3% after Dish Network Corp. DISH +2.42%opted to not hike its bid for the wireless carrier.
The Nasdaq Composite COMP -0.22% lost 5.72 points, or 0.2%, to 3,476.44.
For every stock rising, nearly two fell on the New York Stock Exchange, where 246 million shares traded as of 1 p.m. Eastern.
Composite volume surpassed 1.4 billion.
Treasury prices fell, with the yield on the 10-year note 10_YEAR +0.96% used in setting mortgage rates and other consumer loans rising to 2.229%.
The U.S. dollar DXY -0.22% edged down against other currencies including the yenUSDJPY -0.11% .
On the New York Mercantile Exchange, gold prices GCQ3 +0.39% gained to $1,373.20 an ounce and crude oil CLN3 -0.11% declined four cents to $98.40 a barrel.
Fed factors
Wall Street had risen sharply both Monday and Tuesday on thinking the Fed would not signal any immediate plan for scaling back on its $85 billion in monthly bond purchases. Read: How to trade the Fed decision.
That said, if Fed officials open the door to tapering on Wednesday, “markets could react poorly,” Sarhan added.
The FOMC resumed its two-day meeting on Wednesday, with a monetary-policy announcement due at 2 p.m. Eastern time. Bernanke is scheduled to start his news conference 30 minutes later. Read about seven charts that tell the Fed not to taper QE3
“The market is trying to position itself for a less-active Fed, and maybe a more normalized interest-rate environment,” said Frederick of the market’s volatile state, in display ever since Bernanke indicated in testimony to Congress four weeks ago that the central bank might begin scaling back its bond purchases should the economy show sustainable improvement.
Kate Gibson is a reporter for MarketWatch, based in New York.
