NEW YORK (AP) — The stock market is waiting on the Fed.
Major indexes drifted lower in midday trading Wednesday as traders wondered what the Federal Reserve will say about the U.S. economy and the central bank's huge stimulus program this afternoon.
The U.S. central bank will release its latest policy update at 2 p.m. Eastern Daylight Time and Bernanke will speak at a press conference thirty minutes later. Comments by Bernanke last month suggesting the central bank may soon ease that support unsettled investors and caused this year's rally in stocks to stall.
"All eyes are on Bernanke and markets are being held hostage until he speaks," said Joseph Tanious, Global Market Strategist at J.P. Morgan Funds.
The Fed has been buying $85 billion of bonds a month to support an economy that is still struggling to grow faster following the Great Recession.
The Dow Jones industrial average fell 19 points, or 0.1 percent, to 15,298 as of 12 p.m. Eastern Daylight time.
The Standard & Poor's 500 index dropped two points, or 0.1 percent, to 1,650. Six of the 10 industry groups in the index fell. Telecommunications stocks fell the most, 0.9 percent.
Bernanke is unlikely to give investors any greater clarity as to when the Fed will start to pull back on its stimulus, Tanious said. Instead, he expects the Fed chairman to reaffirm the bank's view that the U.S. economy is slowly improving and that it will consider reducing the stimulus at some point this year.
While stocks may decline in the short term after Wednesday's announcement, they should revive over coming months as investors start to focus on the outlook for the economy and company earnings.
"Once we get past Bernanke's testimony today, and once we're past the knee-jerk reaction, whatever it may be, I suspect the markets (to) head higher," said Tanious.