UKX FTSE 100 Index

By Andrea Riquier

The Fed decision is scheduled for 2 p.m. ET

U.S. stocks opened lower Wednesday morning lower ahead of a Federal Reserve decision on interest rates, and amid liquidity issues in money markets, uncertainties in the Middle East over oil supplies and more signs that President Trump's trade war is affecting corporate profits.

How are major benchmarks faring?

The Dow Jones Industrial Average gave up 33 points, or 0.1%, to open at 27,088, while the S&P 500 fell 2.8 points, or 0.1%, to open at 3,002.90. The Nasdaq fell 11.6 points to start trading at 8,174, a decline of 0.1% and paring pre-market losses.

On Tuesday, the Dow (http://www.marketwatch.com/story/us-stocks-set-to-drift-lower-as-oils-surge-takes-a-pause-2019-09-17) gained 33.98 points, or 0.1%, to close at 27,110.80, while the S&P 500 rose 7.74 points, or 0.3%, to end at 3,005.70, supported by gains in real estate, up 1.3% and utilities, up 0.9%--sectors considered defensive.

The Nasdaq Composite Index advanced 32.47 points, or 0.4%, to 8,186.02.

What's driving the market?

All eyes are on the Fed ahead of its afternoon policy statement, but investors have been watching the central bank after its intervention in money markets on Tuesday to resolve unexpected liquidity issues.

Read: 3 things to watch as the Fed meets on interest rates Wednesday (http://www.marketwatch.com/story/3-things-to-watch-as-fed-meets-on-interest-rates-next-week-2019-09-14)

The Fed on Tuesday carried out its first overnight repurchase auction in a decade to bring the benchmark federal-funds rate, which jumped to a high around 9%, back into a desired 2%-2.25% range by purchasing repos worth $53 billion (http://www.marketwatch.com/story/fed-announces-plans-to-carry-out-repo-operation-for-second-straight-day-2019-09-17-16915031).

The New York Fed held a second repurchasing auction early Wednesday (http://www.marketwatch.com/story/fed-carries-out-repo-operation-for-second-straight-day-2019-09-18)injecting another $75 billion by temporarily buying securities from Wall Street dealers.

The actions come ahead of a policy decision by the rate-setting Federal Open Market Committee at 2 p.m. Eastern Wednesday, as the central bank is expected to reduce interest rates by a quarter of a percentage point and communicate its future monetary-policy plans to stave off the harmful effects of a Sino-American trade war and a creeping global economic slowdown.

Fed Chairman Jerome Powell is slated to host a news conference a half-hour after the policy makers's decision is released and analysts expect him to answer questions about the health of the central bank's financial plumbing after those money-market maneuvers earlier in the week.

"The Fed are tipped to lower rates, but given the US economy is broadly in good health, there is an argument the central bank should hold fire on lowering interest rates," wrote David Madden, market analyst at CMC Markets UK, in a daily research note. "The US employment rate is close to a 50-year low, core [consumer-price index, a key inflation measure] is rising, plus wages are robust, so the Fed have justification for keeping rates on hold," he said.

Markets are also watching Middle East developments after Saudi Arabia's oil-processing hub was attacked over the weekend by reported drone and missile attacks.

The attack initially caused the Brent price , the international benchmark, to rise 15% on Monday, the biggest single-session rise on record dating back to 1988, but U.S. benchmark crude, West Texas Intermediate grade and Brent oil have been giving up much of their gains since then as Riyadh has signaled that its plants will come back on line sooner than originally feared.

In U.S. economic news, the Commerce Department reported that housing starts, the number of new homes on which builders have broken ground, surged 12.3% from July to August, to a seasonally adjusted annual rate of 1.364 million. Economists surveyed by MarketWatch had forecast a 1.261 million pace. Permits, which foreshadow future starts, were up 7.7%, also beating estimates.

Which stocks are in focus?

Shares of FedEx Corp.(FDX) tumbled by double digits after the logistics group missed profit expectations (http://www.marketwatch.com/story/fedex-stock-down-8-after-company-lowers-outlook-on-trade-tensions-2019-09-17)and cut its outlook, citing "increasing trade tensions," and global economic sluggishness. Shares were down 12% in premarket action. Competitor UPS (UPS) also saw its stock fall as Trump's trade war takes its toll on international traffic.

Chewy Inc.'s stock (CHWY) was off nearly 7% on Wednesday morning after the pet retailer reported results (http://www.marketwatch.com/story/chewy-stock-slips-after-quarterly-results-2019-09-17).

CDW Corp.'s shares (CDW) are climbing by 6% on news the tech group will join the S&P 500 this month.

AT&T Inc.'s stock (T)was in focus amid reports that bankers were pushing the telecom giant to unload its DirecTV unit. Shares of AT&T were off by about 0.7% in early trading.

How are other markets trading?

The yield on the 10-year U.S. Treasury note fell to 1.77% early Wednesday from 1.805% on Tuesday.

Read: Saudi oil attack shows bond traders are worrying more about growth than inflation (http://www.marketwatch.com/story/saudi-oil-attack-shows-bond-traders-are-worrying-more-about-growth-than-inflation-2019-09-16)

Gold prices was nearly flat, trading at $1,513.10 an ounce ahead of the Fed decision, while the U.S. dollar, as measured by the ICE U.S. Dollar Index , a gauge of the buck against a basket of leading rivals, was up 0.1%.

In Asia overnight Monday, Hong Kong's Hang Seng Index fell 0.1%. China's CSI 300 Index gained 0.5% after a 1.7% drop on Tuesday, and Japan's Nikkei 225 index fell 0.2%.

In Europe, the Stoxx Europe 600 was virtually unchanged for the day.

(END) Dow Jones Newswires

September 18, 2019 09:52 ET (13:52 GMT)

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