US open: Investors brush aside good economic data ahead of Fed

At 1505 BST, Dow Jones Industrial Average was off 0.13% or 27.21 points at 20,921.43 and the S&P 500 by another 0.23% to 2,385.61 while the tech-heavy Nasdaq Composite was down 0.43% to 6,069.30.

Stock in Cupertino, California-based Apple was down by 1.5% after the technology giant said late on Tuesday that it sold fewer iPhones in the second quarter compared to a year ago. The company posted a 4.6% jump in revenue to $52.9bn, which was below analysts' estimates.

The Institute for Supply Management's gauge of non-factory sector activity rose from a reading of 55.2 in March to 57.5 in April, beating forecasts for an improvement to 56.0.

In parallel, the ADP report published before the opening bell showed the economy created 177,000 new jobs in April, just a tad higher than the consensus forecast of 175,000.

However, economists expressed surprise at the fact that the March estimate was only revised lower from 263,000 to 255,000, versus the official preliminary estimate of just 98,000.

Still ahead on Wednesday lay the US central bank's policy announcement; although analysts did not expect any actual policy moves, they were split on whether the post-meeting announcement would sound a more dovish note or exactly the oppossite.

Craig Erlam, senior market analyst at Oanda, said: "While the Fed decision itself may not surprise anyone – with markets pricing in only a 5% chance of a rate hike this evening – the statement could offer important clues on the central banks intentions at upcoming meetings. In the absence of a press conference with Chair Janet Yellen, the statement is all we have to go off and if the Fed is aiming to raise rates again in June, it may signal its intention to do so."

"Fortunately, with markets already pricing in a June rate hike at 66%, the Fed doesn’t have to work as hard to manage expectations as it did earlier this year and so any signal may be fairly subtle."

Meanwhile, oil prices were on the front foot ahead of the latest inventory data from the Energy Information Administration at 1530 BST. West Texas Intermediate was up 0.42% to $47.86 a barrel.

On Tuesday, the American Petroleum Institute's inventory data for the week ending 28 April showed a 4.16m barrel draw in US oil stockpiles, versus expectations for a smaller reduction of around 2.0m barrels.

In corporate news, Reynolds American posted a mixed set of first quarter financials, with earnings per share of 56 cents missing the median Wall Street estimate for 57 cents but with sales of $2.95bn slightly outpacing forecasts of $2.92bn.

Shares in KFC-owner Yum Brands on the other hand were on the frontfoot after posting a 2% rise in quarterly like for likes.

Time Warner was also edging higher after reporting quarterly earnings per share of $1.66 in comparison to analysts' forecasts for $1.45.