US open: Early losses on Wall Street ahead of Fed policy announcement

Losses were seen across most major indices after the open on Wall Street on Wednesday, albeit with the tech-heavy Nasdaq underpinned by solid results from Apple as investors waited patiently for the latest policy announcement from the Federal Reserve.

At 1530 BST, the Dow Jones Industrial Average and S&P 500 were down by 0.37% and 0.32%, respectively, while the Nasdaq Composite was 0.05% higher.

Pacing gains at the sector level were: Computer hardware (3.34%), Auto Parts (2.26%), Gambling (1.75%), Aluminium (1.73%) and Iron & Steel (1.47%).

Connor Campbell, a financial analyst at SpreadEx, noted, "There wasn't much to the US open, investors holding off from anything drastic ahead of May’s Federal Reserve meeting."

"Despite Apple rising 4% following its best ever set of second quarter results – not that the tech giant's update was free of the expected iPhone-related issues – the Dow Jones ended up dipping 50 points after the bell, giving up 24100 in the process," he added.

However, those better-than-expected earnings from Apple after the market close on Tuesday provided some cheer, as the tech company posted a 16% jump in second-quarter revenue to just over $61bn and said it was returning another $100bn to shareholders.

David Morrison, chief market analyst at GKFX, said: "There was some relief overnight after Apple not only produced a strong set of sales and earnings but also released positive forward guidance. There had been fears that the company would caution a slowdown in iPhone sales going into the next quarter."

The Fed's latest policy announcement is due at 1900 BST. With no change expected to policy, eyes will be on the accompanying statement for any clues on the number of rate hikes this year.

"But otherwise traders may not be in too much of a hurry to add to positions ahead of tonight's FOMC rate decision," Morrison added.

"While there's little expectation of any change in the Fed funds rate, market participants will be paying very close attention to the accompanying statement," he said.

Morrison also noted that the recent pick-up in inflation and bond yields, together with the related turnaround in the dollar, would leave many investors thinking that the FOMC could possibly lead to a tightening in monetary policy at a faster rate than indicated at the March meeting.

"This could weigh on equities, unless the committee expresses bullishness on the outlook for US economic growth," Morrison concluded.

Against that backdrop, earlier in the session the ADP employment report showed that job gains in America's private sector slowed down last month.

The payroll consultancy's closely-followed gauge of private sector hiring revealed that companies in the US took on 204,000 new workers last month.

Although that was less than the 241,000 seen in the month before, it was slightly better than the 193,000 that economists had penciled-in.

On the corporate front, shares in Humana lost 1.98% despite the health insurer having posted first quarter profit and revenue beats, as did cosmetics firm Estee Lauder; whose shares were down 3.86% in early trading.

Pharmacist CVS saw shares drop 2.91% after it reported a first-quarter profit beat and provided upbeat 2018 guidance, while beverage maker Molson Coors stumbled 11.82% on news its sales volumes were continuing to dry up.

Kraft Heinz and Tesla are also due to report after markets close.