US open: Stocks decline ahead of FOMC rate decision

US stocks were sitting lower on Wednesday ahead of the Federal Reserve’s interest rate announcement.

At 1517 GMT, the Dow Jones Industrial Average fell 1.03%, the Nasdaq declined 1.28% and the S&P 500 dropped 0.77%.

While the Federal Open Market Committee is expected to keep rates unchanged at 0.50%, investors will be looking closely at the accompanying statement for clues on the timing of the next hike.

The Fed last month decided to raise interest rates for the first time in nearly a decade by 25 basis points.

Since the last policy decision, oil prices have taken another tumble, the IMF has downgraded global growth forecasts while concerns about the knock-on effect of the slowdown in emerging economies have escalated.

“Fundamentally these factors should dim the prospects of future rate hikes but with ongoing discussions suggesting that the Fed made a mistake by raising US rates in the first place, it seems likely that the minutes may adopt a hawkish bias similar to December in an attempt to retain credibility and prevent further disruption in the financial markets.”

Meanwhile, oil prices reversed Tuesday’s gains as OPEC urged co-operation from oil producing nations outside the cartel to address the oversupply in the market to boost prices.

West Texas Intermediate fell 1.3% to $31.03 per barrel and Brent crude dipped 0.2% to $31.71 per barrel at 1516 GMT.

“Yesterday’s huge range in the oil price from highs of $32.70 to lows of $29.22 opens the door for a similar story today as the markets looks for support and resistance around the previous highs and lows,” said James Hughes, chief market analyst at GKFX.

“Profit taking and the ‘will they, won’t they’ feeling over a potential emergency OPEC meeting are causing the big swings. Russia remains the lynch pin in any potential deals on production as OPEC members will only act if a worldwide pact is agreed on with other oil producing regions, something that Russia has been against.”

Elsewhere, China once again dominated the day in Asia, with its main index closing down slightly after having recovered from some serious losses early in the session. Wednesday was the second day of losses for Shanghai, which lost a sizeable 6.4% on Tuesday as investors were worried that capital outflows from the mainland were increasing during the country's slowdown.

In company news, Apple shares slumped after the technology giant said late on Tuesday that iPhone sales grew at the slowest pace since its first model and that revenue will fall at its steepest rate in 15 years.

Boeing also plunged after the aircraft manufacturer issued a full-year guidance of $8.45 to $8.65 per share that was below expectations.

The dollar rose 0.69% against the pound and increased 0.06% against the yen but fell 0.05% against the euro.