US open: Stocks advance as FOMC's decision looms large

US equity markets rose early on Wednesday, as investors waited to see whether the Federal Reserve will decide to hike interest rates this year.

Shortly after 1400 GMT, the Dow Jones Industrial Average was up 72 points to 17,653.11,while the S&P 500 and the Nasdaq were eight and 14 points higher respectively.

The US central bank concludes its two-day meeting on Wednesday and while it is widely expected to postpone a first hike in interest rates until the new year, market participants were reluctant to make any big bets.

"After the September FOMC meeting the market consensus was surprised by the dovish tone of the Fed," said analysts at Rabobank.

"However, rather than been reassured by the expectation of low rates for longer, risky assets lost their footing as the market absorbed a less appealing outlook for both US and global growth.

"Although risky assets subsequently found comfort in the release of the weak September payrolls release, there remains a lot of uncertainty as to what cues investors will take from today’s policy statements from the FOMC."

Trade gap narrows

On the economic data front, the US trade gap in goods narrowed more than expected in September to reach a seven-month low, figures released on Wednesday showed.

According to official government data, the trade gap in goods, excluding services, declined 13% month-on-month to $58.6bn compared with analyst expectations for a $64.3bn figure.

"We continue to see a large drag from private inventory investment as trimming headline growth, but with a smaller drag from net trade and more modest equipment investment, the composition of third quarter GDP is likely to be more balanced," said analysts at Barclays.

Meanwhile, the Mortgage Bankers Association said its seasonally-adjusted index of application activity, which covers home purchase demand and refinancing demand, declined 3.5% in the week ended 23 October.

Apple gains, Twitter disappoints

In company news, Apple climbed 1.75% after the iPhone and iPad maker said late on Tuesday that its fourth quarter profit surged 31%.

“Regardless of the worries markets might have about Chinese growth this has not negatively affected sales of iPhones to the Asian powerhouse as once again Apple have been able to post much better figures that had been expected,” said IG’s senior market analyst Alastair McCaig.

There was less positive news for Twitter, however, with the social media giant plummeting 9.76% after delivering a lower-than-expected outlook late on Tuesday, when it also reported its active user growth was smaller than expected.

Akamai Technologies slumped 19.3% after its quarterly results missed expectations, while chocolate maker Hershey had bitter news for investors, as it reported a 31% drop in earnings ahead of the bell, which dragged shares down 4.07%.

Newly-listed Ferrari fell 4.65% despite reporting a rise in profit and revenue, while Walgreens Boots Alliance tumbled 7.22%, despite swinging to a profit in the fourth quarter, as earnings beat forecast.

Sector peer Rite Aid dropped 8.02% after agreeing to a takeover from Walgreens worth $17.2bn in cash.

Meanwhile PayPal and GoPro will publish results after the close.

The majority of Asian stocks were firmly in the red on Wednesday, as investors remained cautious ahead of the upcoming Federal Reserve’s decision on interest rates, while European stocks rebounded from the previous session’s dip and were mostly higher.

The dollar was broadly flat against the yen but gained 0.11% against the pound and lost 0.27% against the euro, while gold futures climbed 1.24% to $1,181.36.

Oil prices surged, with West Texas Intermediate climbing 3.16% to $44.61 a barrel and Brent crude rising 2.98% to $48.25 a barrel.