US open: Dow down 70 points as investors await Fed's rate decision

US stocks declined early on Wednesday as investors braced themselves for the statement from the Federal Open Market Committee, which could pave to way for a first hike in interest rates in almost 10 years.

Just after 10:00 in New York, the Dow Jones Industrial Average was down 77 points, while the S&P 500 and the Nasdaq lost seven and 15 points respectively.

At 18:00 GMT investors will find out whether the Fed has decided to remove the word “patient” from its current policy statement, with speculation that such a move could lead to the US central bank lifting interest rates as early as June.

“The Fed has stressed repeatedly that the first hike will be data dependent and I expect if it does remove its pledge to be patient, it will stress this even more so in order to avoid any market panic,” said OANDA’s senior market analyst Craig Erlam.

However, Erlam warned that the Fed could spark a negative surprise among investors.

“The biggest risk to the markets today comes from ‘patient’ remaining in the statement as it may signal a change of course from the Fed,” he said, citing disappointing retail sales and the decline in oil prices as factors weighing on inflation.

Elsewhere, data on Wednesday showed mortgage applications fell 3.9% last week, making it the fourth drop in five. Applications for new loans to buy homes fell 2% however an indicator of home-owners appetite to refinance existing mortgages had a deeper decline of 5%.

In company news, FedEx fell almost 2% after revenue missed estimates, even though earnings topped analysts' expectations with third-quarter net profit of $580m, up 53% from $378m a year earlier.

Kraft Foods Group lost 1.8% after recalling 242,000 cases of Macaroni & Cheese Dinner boxes, saying specific products could contain small metal pieces.

Alibaba Group Holding declined up to 1% as the company’s stock-sale lockup ends on Wednesday, while Oracle rose over 4% after lifting its dividend.

Sports clothing group Quiksilver jumped 16% after reporting a smaller-than-expected loss on Tuesday.

Oil prices continued to tumble after the American Petroleum Institute said late on Tuesday night that crude supplies rose much more than expected.

West Texas Intermediate losing 2.96% to $42.21 a barrel, while Brent crude shed 1.28% to $52.83 a barrel.

The dollar gained 0.53% against the pound, but slipped just over 0.1% against both the euro and the yen, while gold futures gained 0.20% to $1,148.40.