(Reuters) – U.S. stocks were little changed on Wednesday, ahead of an expected Federal Reserve interest rate hike, as weakness in Facebook’s shares (FB.O) for a third day were countered by gains in energy stocks.
Technology shares .SPLRCT fell 0.3 percent as Facebook’s data privacy travails persisted. Facebook was down 2 percent, adding to a 9 percent loss in the past two days in the wake of an uproar over the alleged misuse of users’ data.
The energy index .SPNY gained 1.15 percent, mirroring a jump in crude oil prices that neared their highest in six weeks after a surprise decline in U.S. inventories and as concern persisted over possible disruption to Middle East supply.
The markets are also jittery about the possibility of a global trade war after the Wall Street Journal said China was planning countermeasures to the Trump administration’s threatened import duties. Equity futures dipped earlier in the day on the news.
That adds to the nerves about what kind of monetary policy regime will be pursued by new Federal Reserve Chair Jerome Powell.
“There has been some worry off-and-on for sometime now. Fear of a trade war versus maybe some hope that it’s not going to be so bad or it’s going to be more limited,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
“There is going to be a little bit more fear this morning, especially heading into the Fed meeting. He’s (Powell) is going get asked about tariffs, its implications for the economy and for the Fed policy.”
At 9:42 a.m. ET, the Dow Jones Industrial Average .DJI was up 0.04 percent at 24,737.57 and the SP 500 .SPX fell 0.05 percent to 2,715.46.
The Nasdaq Composite .IXIC fell 0.16 percent to 7,352.43.
Among stocks, General Mills (GIS.N) slumped about 10 percent after the company cut its full-year profit forecast due to higher freight and commodity costs.
That weighed on other food companies, with Kellogg (K.N) down 4 percent and JM Smucker (SJM.N) and ConAgra (CAG.N) down 3.6 percent.
The Fed is widely seen raising its benchmark interest rate by 25 basis points when it concludes the first meeting of the Jerome Powell era at 2:00 p.m. ET.
While markets are sure about the quarter-point hike, they are less confident of what the Fed signals next: three hikes this year, as previously forecast by policy makers, or four.
Some investors believe that corporate tax cuts and recent hints of inflation pressures will push policymakers to add an additional increase beyond the expected three.
One worry among equity investors is faster rate hikes could dent the appeal of stocks relative to bonds. Stocks remain relatively expensive despite recent pull backs.
Ahead of the Fed announcement, two-year note yields US2YT=RR, which are highly sensitive to monetary policy, jumped to 2.357 percent, the highest since September 2008.
Advancing issues outnumbered decliners on the NYSE for a 1.18-to-1 ratio, and for a 1.05-to-1 ratio on the Nasdaq.
Reporting by Sruthi Shankar in Bengaluru; Editing by Dan Burns and Savio D’Souza