Wall Street flat as investor hold off ahead of Fed Reserve announcement

U.S. Federal Reserve Board Chair Janet Yellen delivers her semi-annual report before the Senate Banking and Urban Affairs Committee in this July 16, 2015 file photo.
U.S. Federal Reserve Board Chair Janet Yellen delivers her semi-annual report before the Senate Banking and Urban Affairs Committee in this July 16, 2015 file photo.PHOTO: REUTERS

NEW YORK (REUTERS) - Wall Street was little changed at the open on Thursday, with investors reluctant to trade ahead of the Federal Reserve's interest rate decision later in the day.

The Fed will announce the outcome of its policy meeting and release its latest economic projections at 2 p.m. ET (Friday 2 am Singapore time) followed by a news conference by Chair Janet Yellen at 2:30 p.m.

An increase in the Fed's benchmark rate, which has been near zero since the depths of the financial crisis in December 2008, would be the first since 2006.

The low rates have helped nurse the economy back to health since the crisis and underpinned a spectacular six-year bull run for stocks. However, there are concerns that continuing with ultra-low rates for too long could lead to asset bubbles such as the one in property prices that led to the last recession.

At 9:35 a.m. ET the Dow Jones industrial average was down 8.42 points, or 0.05 per cent, at 16,731.53, the S&P 500 was down 1.96 points, or 0.1 per cent, at 1,993.35 and the Nasdaq Composite index was down 4.00 points, or 0.08 per cent, at 4,885.24.

Six of the 10 major S&P sectors were lower, with the telecommunications index's 1.88 percent loss leading the decliners.

Verizon's 2.9 percent fall weighed the most on the Dow and the S&P. The company said it expected 2016 earnings to"plateau" amid stiff competition.

The CBOE volatility index, known as Wall Street's "fear gauge", was down marginally at 21.36, just above its long-term average of 20.

Energy stocks pushed Wall Street higher on Wednesday after an almost 6-percent jump in oil prices, but trading was thin. Oil prices were little changed on Thursday. "As it stands now considering (Wednesday's) market rally, the bearish decision will be for the Fed not to hike," Mike O'Rourke, chief market strategist at Jones Trading, said in a note.

The Fed has said it will raise rates when it sees a sustained recovery in the economy.

Data on Thursday showed the number of Americans filing new applications for unemployment benefits fell last week to the lowest level in eight weeks.

Other data showed that housing starts fell more than expected in August, but a rebound in building permits pointed to sustained strength in the housing market, which should support economic growth.