Wall Street slips ahead of FOMC announcement

Stocks have drifted downward today after a recent good run, as the market awaits the Fed’s monetary policy statement.

The Dow has had three days of gains in a row, but the momentum has petered out today, with the major US stock indices all slightly down.

Naturally, investors are behaving with caution in the knowledge that the Fed decision is imminent, and by early afternoon in New York, the Dow Jones was down 0.24% at 15,492 and the S&P 500 dropped 0.1% to 1703.4.

The Fed announcement is at 7pm BST, with many newswires reporting expectations of a reduction in the region of $10 to $15 billion. A press conference held by Fed Chairman Ben Bernanke will follow half an hour after the announcement.

The market will be watching the press conference closely for hints about who might follow in Mr Bernanke’s post, with Larry Summers’ recent withdrawal from the role having spurred a significant amount of market movement.

Housing start for August came in well below expectations today at a seasonally-adjusted, annualised rate of 891,000. July’s number was originally reported as 896,000 but was revised down today to 883,000, meaning August saw a slight rise.

Despite yesterday’s strength in the housing market index, which shows sentiment remains high amongst builders, we now have indications that momentum in the housing market may be ebbing. Permits dropped to 918,000 in August from July’s 950,000.

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