Stocks move up, dollar dips as investors await Fed

Stocks move up, dollar dips as investors await Fed

It was widely expected that the U.S. central bank won't raise interest rates following the meeting, but investors believe the Fed will announce the unwinding of its $4.5-trillion balance sheet.

In the bond market, treasuries came under pressure on the heels of the announcement from the Fed.

"We had suspected that the recent softness of core inflation could persuade officials to hold off on the next rate hike until next year", said Andrew Hunter, US economist at Capital Economics.

"If I'd be watching anything, it would be primarily with regard to their plans to raise rates in December, which now the market has a 50-50 odds on", said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

The tech-heavy Nasdaq also eked out a positive finish, adding 0.1 percent to reach 6,454.64 points, just short of record territory. "It is the start of something unknown, it is going to start jitters".

"I'll admit that it feels a little surreal that this Federal Reserve with its addiction to manipulating markets is actually trying to kick the habit. That and the statement will perhaps provide some insight into what they're going to do in terms of deleveraging their balance sheet", said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

While a September interest rate increase is not expected, investors will closely study Yellen's views on inflation.

Economic data in the day includes a Commerce Department report on monthly housing starts, due at 8:30 a.m. ET.

See:MarketWatch's economic calendar (

Biotechnology stocks are seeing considerable strength, however, with the NYSE Arca Biotechnology Index climbing by 1.5 percent.

On the economic front, USA privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,180,000, beating market consensus, the Commerce Department reported on Tuesday.

FedEx Corp.(FDX) added 2.1% after the logistics company late Tuesday reported earnings below forecasts (, saying the quarter offered "significantly operational challenges" due to a cyberattack and Hurricane Harvey. While the UK's FTSE 100 Index edged down by 0.1%, the German DAX Index and the French CAC 40 both crept up by 0.1%.

In overseas trading, stock markets across the Asia-Pacific region turned in a lackluster performance during trading on Wednesday.

Oil prices clung to gains with a barrel of crude rose two cents at $49.91.