Investing.com – Wall Street traded mostly flat on Wednesday as investors preferred to stand pat at record highs ahead of the Federal Reserve’s (Fed) decision on monetary policy.
At 11:38AM ET (16:38GMT), the Dow Jones fell 34 points, or 0.17%, the S&P 500 lost 5 points or 0.24%, while the tech-heavy Nasdaq Composite slipped 4 points, or 0.08%.
The Fed is widely expected to confirm market forecasts for a 25 basis point hike in interest rates at 2PM ET (19:00GMT) Wednesday, though attention is more likely to focus on the updated economic forecasts and particularly the “dot plot” showing policymakers’ expectations for the future path of interest rates, along with the follow-up press conference by Fed chief Janet Yellen, in an attempt to extrapolate how many more increases could be expected in 2017.
Several analysts were betting that the dot plot would remain unchanged, pointing as it did the prior release in September to two rate hikes next year, despite the fact that a recent Wall Street Journal survey of economists suggested there would be three increases in the following 12 months.
With the December hike fully priced in, the next tightening of monetary policy was currently expected in June 2017 with odds at 60.1%, according to Investing.com’s Fed Rate Monitor Tool.
While waiting for the decision, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slipped 0.25% to 100.83 by 11:40AM ET (16:40GMT), while gold traded at $1,165.45 a troy ounce, up 0.56% and holding above the lows of $1,162.95 set on Monday, the weakest since February 4.
Furthermore, the yield on 10-year U.S. Treasury notes was down to 2.437%, from the prior close of 2.480%.
Among economic data out earlier on Wednesday, November retail sales disappointed with a smaller-than-expected increase, causing some concern over the state of the American consumer.
The weak report was the basis for the Atlanta Fed deciding later on Wednesday to cut its forecast for U.S. economic growth in the fourth quarter to 2.4%, from the prior estimate of 2.6%.
Additionally, factory gate prices increased more than expected in November, suggesting inflation could continue to rise.
Industrial production for the same month declined more than forecast, though manufacturing output managed to show a smaller-than-expected decrease.
Business inventories in October shrank slightly more-than-expected, in what was its biggest decline since November 2015. The data suggested a modest contribution to fourth quarter growth via inventory investment.
In corporate news, eyes were on the outcome of a meeting between tech leaders and U.S. President-elect Donald Trump to see if they might settle differences over government surveillance and encryption, while coming to terms over Trump’s desire to see tech firms bring production home.
Top representatives from Apple (NASDAQ:AAPL), Google (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), IBM (NYSE:IBM), Oracle (NYSE:ORCL) and Tesla (NASDAQ:TSLA) were expected to be among the attendees.
Shares of General Motors (NYSE:GM) and Ford (NYSE:F) slumped on Wednesday on the back of a report that China may be going after an unnamed automaker for monopolistic behavior.
Meanwhile, oil prices continued to slump on Wednesday on the back of a report from the International Energy Agency (IEA) which said it believes OPEC pumped about 34.2 million barrels per day (bpd) of crude in November, more than 500,000 bpd above OPEC's official estimate for October, putting into doubt the effectiveness of the recent agreement among major oil producers to reduce production.
Furthermore, OPEC admitted that it forecast a bigger-than-expected 2017 oil surplus.
Crude managed to initially pare losses after the Energy Information Administration said that U.S. oil stockpiles showed a much larger than expected weekly draw, but prices returned to levels seen before the data release near midday U.S. trade.
U.S. crude futures fell 1.70% to $52.08 by 11:44AM ET (15:44GMT), while Brent oil traded down 1.33% to $54.98.