By Yasin Ebrahim
Investing.com – The S&P 500 was in a holding pattern Wednesday, as investors opted for caution ahead of the Federal Reserve decision due later.
The S&P 500 was down 0.17%, the Dow Jones Industrial Average 0.1%, or 20 points, the and the Nasdaq Composite slumped 0.80%.
The Federal Reserve is widely expected to announced that it will speed up the pace of tapering its bond purchases to provide it with ample time to lift rates amid concerns that elevated inflation could persist longer than expected.
"A sooner end to asset purchases, furthermore, opens the door for a potentially earlier transition to Phase 2 of policy adjustment, rate hikes," Stifel said in a note.
The faster taper is largely believed to have been priced in ahead of the Fed meeting, but the Fed's projections on the outlook for the economy and inflation will garner investor attention.
Against the backdrop of expectations for less market-friendly policy from the Fed, investors continued to shy away from sectors with higher valuations like tech.
Google-parent Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB), and Apple (NASDAQ:AAPL), which combined make up more than fifth of the broader S&P 500 were in the red.
Energy followed oil prices lower on fears about supply outpacing demand in the wake of growing concerns about the Omicron threat on travel, and ultimately energy demand.
Devon Energy (NYSE:DVN), Occidental Petroleum (NYSE:OXY), Diamondback Energy (NASDAQ:FANG) fell more than 3%.
Consumer discretionary was led lower by further retreat in Tesla (NASDAQ:TSLA), with electric vehicle maker shedding more than 2% intraday.
Health care, however, was pushed higher by a more than 9% jump in Eli Lilly (NYSE:LLY) after the pharmaceutical giant upgraded its earnings outlook for 2021, and guided further strength for 2022.