U.S. stocks fluctuated, following the biggest two-day rally in five weeks, as investors awaited a Federal Reserve decision that is forecast to cut monthly bond purchases by $10 billion.
Homebuilders rallied after KB Home reported revenue that topped analysts’ estimates as selling prices rose. Oracle Corp. declined 2.5% after reporting fiscal third-quarter sales and profit that fell short of analysts’ projections. FedEx Corp. slipped after reporting results that were hurt by inclement weather.
The Standard & Poor’s 500 Index (CME:ESM14) fell less than 0.1% to 1,871.23 at 11:59 a.m. in New York. The equity gauge is about seven points away from its record reached on March 7. The Dow Jones Industrial Average slipped 3.7 points, or less than 0.1%, to 16,332.47. Trading in S&P 500 stocks was 28% lower than the 30-day average at this time of day.
“Today really comes down to the Fed and what they are going to say,” Richard Sichel, chief investment officer at Philadelphia Trust Co., said in a telephone interview. He helps oversee $2 billion. “We had a nice market yesterday and we think that we won’t see a move in a dramatic direction this morning. The market will tread water until this afternoon.”
The Federal Open Market Committee will end a two-day meeting at which policy makers will opt for a third $10 billion cut in monthly bond buying to $55 billion, according to the median of economist estimates in a survey. Officials will continue reductions at that pace at every meeting before closing the program at their Oct. 28-29 gathering, the survey showed.
Fed Chair Janet Yellen said last month the U.S. economy was strong enough to withstand measured reductions to the central bank’s monthly bond purchases. Three rounds of Fed stimulus have helped push the S&P 500 up 177% from a 12-year low, as U.S. equities enter the sixth year of a bull market that started March 9, 2009.
The S&P 500 advanced 1.7% in the last two days as Russia pledged not to seek territory beyond Crimea. The U.S. and Europe are preparing to ratchet up sanctions on Russia after President Vladimir Putin signed an accord setting in motion Crimea’s accession to Russia. With visa bans and asset freezes on Russian officials failing to sway Putin, European Union leaders will meet tomorrow to consider “additional and far- reaching consequences.”
“The Fed is always a big issue, but I think everybody has a good idea about what they’re going to do,” said Randall Warren, who manages $100 million as chief investment officer of Warren Financial Service in Exton, Pennsylvania. “The numbers that are coming out of the U.S. have held up well through a tough winter. Geopolitical issues are still going on, but it certainly doesn’t appear that we’re being pulled into any serious conflicts.”
The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, fell 0.8% to 14.40 for a third day of losses.
Investors have added $8 billion to U.S. equity exchange- traded funds in the past five days and $1.1 billion to bond ETFs, data compiled by Bloomberg show. Materials stocks absorbed the most money among industry ETFs, taking in $689 million during the past week.
Six of the 10 main industries in the S&P 500 retreated. Energy and industrial shares lost at least 0.2% for the biggest declines. Phone companies gained 0.5%.
FedEx fell 0.2% to $138.30. The operator of the world’s largest cargo airline cut its 2014 profit forecast after unseasonably cold winter weather grounded flights and made it harder to deliver packages last quarter.
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