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Stocks under pressure ahead of Fed announcement

Stock market stocks

NEW YORK (CNNMoney) — U.S. stocks were choppy early Wednesday, June 20th as investors awaited the Federal Reserve’s announcement as to whether the central bank will announce any new stimulus action when it wraps up its two-day meeting.

“Prices have kind of flat lined at the moment because investors are reluctant to get in front of the release,” said Mark Luschini, chief investment strategist Janney Montgomery Scott.

Dow Jones industrial average slid 17 points, or 0.1%, the S&P 500 shed 3 points, or 0.2% and the Nasdaq lost 3 points, or 0.1%.

Investors also reacted to news that Greece has formed a coalition government, which is a step in the right direction, though the country still has a tough road ahead.

In a classic ‘sell on the news’ move, shares of The National Bank of Greece slid 9% and Global X FTSE Greece 20 ETF lost more than 1%. Both stocks were up sharply over the past five days.

Greece has been a thorn in investors’ sides for months, with fears about the country leaving the eurozone and the ripple effect on other sovereign nations sending global financial markets on a roller coaster ride.

But investors remain on edge ahead of the Fed’s policy statement shortly after noon. There’s been growing hope that Fed’s Open Market Committee will announce plans to continue its so-called Operation Twist bond buying program, or some other type of stimulus at the close of its two-day policy meeting.

While such an announcement seemed unlikely a few months ago, the bleak recent jobs report in the United States, combined with weaker economic growth, have led observers to conclude that some type of Fed action is imminent. A move would likely provide a boost to U.S. stocks, at least in the short term.

“While it’s probably a net positive, something like an extention of Operation Twist may not be enough to account for the rally in risk assets that has occurred over the last couple of weeks,” said Luschini. “That’s why the Fed may accompany whatever action it chooses to do with strong commentary that would help support the rally.”

The FOMC is due to release a statement at 12:30 p.m. ET, and Fed chair Ben Bernanke will hold a news conference at 2:15 p.m. ET.

CNNMoney’s Fear & Greed index shows investors becoming less fearful, although the reading remains in “fear” territory. Just last week, the index had been in “extreme fear” territory.

U.S. stocks finished up about 1% Tuesday, as investors signaled hope for some Fed action.

World markets: European stocks were all up in afternoon trading. Britain’s FTSE 100 rose 0.5%, the DAX in Germany edged up 0.4% and France’s CAC 40 rose 3%.

Late Tuesday, European leaders at the G-20 meeting pledged to “take all necessary policy measures to safeguard the integrity and stability” of the euro.

But investors are hoping to hear more action from leaders at next week’s two-day EU summit.

Asian markets ended mixed. The Shanghai Composite slid 0.3%, while the Hang Seng in Hong Kong added 0.5% and Japan’s Nikkei gained 1.1%.

Economy: Oil prices slid after the U.S. Energy Information Administration’s weekly crude inventories report showed an increase of 2.9 million barrels in the week ended June 16. Economists had expected a decline.

Oil for July delivery slid $1.53 to $82.50 a barrel.

Companies: Shares of Dow component Procter & Gamble continued to fall as the maker of consumer products cut its sales and earnings guidance for the current quarter and the full year.

Shares of Adobe Systems dropped after the software maker lowered its guidance after Tuesday’s close, citing “a weaker demand forecast in Europe.”

La-Z-Boy’s stock was lower after the company beat expectations in releasing its quarterly earnings.

Jabil Circuit shares got a boost after the contract electronics manufacturer reported improved earnings in line with forecasts.

Currencies and commodities: The dollar was down against the euro and the British pound but up against the Japanese yen.

Gold futures for August delivery dropped $20.50 to $1,602.70 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.66% from 1.62% late Tuesday.

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