Wall Street treads water, stays on ECB watch
NEW YORK (Reuters) - Stocks closed out a second straight session of thin trading on Wednesday, with investors reluctant to make big bets ahead of a crucial meeting of the European Central Bank, which could announce new policies to help contain the euro zone's debt crisis.
Media reports that European policymakers would unveil a bond-buying plan to bring down crippling borrowing costs in euro zone economies boosted sentiment, but it wasn't enough to drive gains in stocks.
Shares opened lower, hurt by FedEx Corp (FDX.N), which late Tuesday cut its quarterly profit outlook on weakness in the global economy. FedEx is considered an economic bellwether because of its role as the No. 2 world shipping company. The stock fell 2 percent to $85.80, United Parcel Service (UPS.N) fell 2.4 percent to $71.94 and the Dow Jones Transportation index .DJT lost 1.1 percent.
"While FedEx is only one company, it's one whose warning is indicative of the global economic slowdown we're dealing with," said Leo Grohowski, chief information officer at BNY Mellon Wealth Management in New York.
Equities seesawed between positive and negative territory throughout the session. About 5.49 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's daily average of 7.84 billion in a sign of investor caution.
Central Bank sources told Reuters the ECB was ready to waive seniority status on government bonds it buys under a new program which it is set to agree on at Thursday's Governing Council meeting.
Bloomberg earlier reported that the ECB would, with broad support from its council members, unveil an unlimited, sterilized program of bond purchases. The ECB has been expected to be cautious about disclosing the size of its bond-buying, given opposition from Germany's central bank.
Further details of the plan will be revealed by ECB President Mario Draghi after Thursday's meeting, but some analysts cautioned the ECB may opt to wait until after the German constitutional court rules on the region's bailout funds on September 12 to announce any new steps.
"While some of the rhetoric coming out of Europe has been positive, we'll need to see follow-through in actions now," said Grohowski, who helps oversee $171 billion in client assets.
The Dow Jones industrial average .DJI was up 11.54 points, or 0.09 percent, at 13,047.48. The Standard & Poor's 500 Index .SPX was down 1.51 points, or 0.11 percent, at 1,403.43. The Nasdaq Composite Index .IXIC was down 5.79 points, or 0.19 percent, at 3,069.27.
Equities have received a boost in recent months on expectations the ECB would start buying Spanish and Italian government bonds to ease the pressure on those countries' bond markets and that the Federal Reserve will adopt new stimulus to prop up the economy. The S&P is up about 7 percent since the start of June.
Nokia (NOK1V.HE) (NOK.N) and Microsoft Corp (MSFT.O) took the wraps off their most powerful smartphone on Wednesday, but the new Lumia failed to impress investors in what may have been the last major shot at winning back a market dominated by Apple (AAPL.O), Samsung (005930.KS) and Google (GOOG.O).
U.S.-listed shares of Nokia slumped 16 percent to $2.38 while Microsoft was little changed.
Shares of Facebook Inc (FB.O) rebounded almost 5 percent off an all-time low after the company promised not to sell stock to cover a nearly $2 billion tax bill and said it will allow employees to cash in their stock weeks ahead of schedule, moving to soothe nervous investors and its own staff as its share price spiraled downward from its $38 IPO price.
About 55 percent of companies traded on the New York Stock Exchange closed lower while 53 percent of Nasdaq-listed shares closed lower.
(Editing by Theodore d'Afflisio)
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