NEW YORK – U.S. stocks fluctuated following a two-day rally in the Standard & Poor’s 500 Index, as investors awaited the outcome of a Federal Reserve meeting for signs about when it plans to scale back stimulus measures.
Sprint Nextel Corp. declined 3 percent after Dish Network Corp. said it won’t make a new offer for the mobile-phone carrier by a deadline. An S&P index of homebuilders slumped 1 percent. Adobe Systems Inc. rose 6.5 percent after reporting second-quarter profit that topped forecasts. FedEx Corp. added 3.4 percent after saying full-year earnings will rise as much as 13 percent.
The S&P 500 lost 0.1 percent to 1,650.31 at 11:23 a.m. in New York. The index rallied 1.5 percent in the previous two sessions. The Dow Jones Industrial Average dropped 14.59 points, or 0.1 percent, to 15,303.64 today. Trading in S&P 500 stocks was 15 percent below the 30-day average at this time of day.
“We will hopefully get a little color from Bernanke on the future of the Fed’s asset purchasing,” Mark Luschini, chief investment strategist at Janney Montgomery Scott LLC in Philadelphia, which manages about $58 billion, said by telephone. “If there is no change to their economic forecast, that suggests they are firming on their economic expectations, which would leave me to believe the tapering will begin at the next meeting in the fall. If they’re lowering the forecast, tapering is at worst deferred.”
The equity benchmark has fallen 1.1 percent from a record high on May 21, the day before Fed Chairman Ben S. Bernanke suggested the central bank could start to reduce bonds purchases if the economy improves in a “real and sustainable way.” The Fed’s record low interest rates and bond purchases have helped fuel a rally in stocks that lifted the S&P 500 as much as 147 percent from its bear-market low in 2009.
Fed forecasts
The Federal Open Market Committee plans to release a statement at 2 p.m. after a two-day meeting in Washington, and Bernanke is scheduled to hold a press conference at 2:30 p.m. The central bank will also release FOMC participants’ forecasts for employment, growth, inflation and interest rates.
The Fed will probably wait to taper bond buying until its Oct. 29-30 meeting, when it will cut its monthly purchases to $65 billion, according to the median estimate in a June 4-5 Bloomberg survey of 59 economists. By then, inflation will be rising toward the Fed’s target, accelerating to 1.3 percent in the third quarter and 1.5 percent in the fourth quarter, according to economists’ estimates.
“The market is looking for a more detailed explanation on the Fed’s current policy,” John Kvantas, a San Antonio-based executive director and portfolio manager at USAA Investments, said by telephone. His firm oversees $57 billion. “The big word is tapering. What does that really mean? The market’s been a bit more volatile both ways, depending on what interpretation people hear for the day.”
Five out of 10 groups in the S&P 500 declined, with telephone and health-care stocks down at least 0.4 percent to lead losses. AT&T Inc. slid 0.6 percent to $35.96 and Verizon Communications Inc. fell 0.7 percent to $51.20.
Sprint bids
