Stocks struggle ahead of Fed

By Andrea Tse

Stocks wavered Wednesday as investors awaited the outcome of the latest Federal Reserve meeting.

The Dow Jones Industrial Average ($INDU) was down by 9 points at 12,828. The S&P 500 ($INX) was down by 2 points at 1,356. The Nasdaq Composite ($COMPX) was up 3 points at 2,927.

Stocks jumped Tuesday, with the S&P 500 soaring to a one-month high, as risk-tolerant investors bet that additional fiscal stimulus is forthcoming from the Fed.

"The Fed offers a moment of economic sanity with its rate decision," said Paul Donovan, a global economist at UBS, ahead of the conclusion of the Fed's two-day meeting."

"If the Fed does nothing but hints . . . that further action may come as soon as the Aug. 1, 2012, FOMC meeting, the markets would still likely be disappointed," said John Canally, an economist for LPL Financial. "The markets' focus then would shift to Bernanke's press conference and back to the Fed's new economic forecast as participants try to gauge the timing of the next round of stimulus."

After the Federal Open Market Committee meeting, the Federal Reserve will post its statement at 12:30 p.m. ET, followed by the outlook of policymakers on the Fed funds rate and economy at 2 p.m. Fed Chairman Ben Bernanke is expected to address the press at 2:15 p.m.

Asian markets settled higher in anticipation of the outcome of the Fed meeting. Hong Kong's Hang Seng index settled up 0.53%, and Japan's Nikkei average closed higher by 1.11%.

The FTSE in London was up by 0.56%, and the DAX in Germany was up 0.31%, with the euro gaining a bit of traction.

The FTSE was edging higher as data showed that employment in the United Kingdom increased to the highest level in more than three years in April and as  minutes from the Bank of England's last policy meeting indicated that the central bank is very close to supporting more monetary stimulus for the economy.

Both Spanish and Italian 10-year yields were easing Wednesday.

Eurozone leaders said at the Group of 20 summit of industrialized nations in Mexico this week that they will strive to reach an agreement on integrating their regional banks by December.

In Greece, there looked to be significant progress in forming a coalition among pro-bailout parties.

August crude oil futures were down 9 cents at $84.26 a barrel. August gold futures were slipping $7.40 to $1,615.80 an ounce.

The benchmark 10-year Treasury was down 2/32, raising the yield to 1.627%, while the dollar was trading sideways, according to the dollar index.

In corporate news, Adobe Systems (ADBE), the publishing software maker, provided a disappointing outlook for its fiscal third quarter on Tuesday because of a weaker demand forecast for Europe. Adobe forecast non-GAAP earnings of 56 cents to 61 cents a share for the three months ending in August on revenue of $1.075 billion to $1.125 billion. Analysts forecast profit of 61 cents a share on revenue of $1.133 billion.

Procter & Gamble (PG), the consumer-products giant, reduced its fourth-quarter profit and revenue forecasts because of slower-than-anticipa​ted sales growth in developed markets.

P&G said Wednesday it expects to post core earnings for the quarter ending in June of 75 cents to 79 cents a share. Its previous estimate was 79 cents to 85 cents a share.

Analysts forecast core earnings of 82 cents a share in P&G's fiscal fourth quarter.

P&G said organic sales are expected to rise 2% to 3%. Its previous estimate was 4% to 5%.

The company said foreign exchange is expected to reduce net sales by 4%. Net sales are expected to be in the range of down 2% to 1%. It previously expected an increase of 1% to 2%.

Quest Software (QSFT) agreed to a higher buyout bid of $2.17 billion after Insight Venture Partners added Vector Capital as a new partner. The new bid is for $25.75 a share, up from a competing bid of $25.50 a share that was reportedly made by Dell (DELL).

Jabil Circuit (JBL) reported adjusted fiscal-third-quarter​ profit of 64 cents a share on revenue of $4.3 billion, in line with analysts' estimates.

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