* CBOE Volatility index falls as Fed decision on timing
* Nov. housing starts at highest in nearly six years
* Indexes: Dow up 0.3 pct, S&P up 0.1 pct, Nasdaq off 0.1
By Angela Moon
NEW YORK, Dec 18 U.S. stocks were little changed
on Wednesday ahead of the Federal Reserve's last policy
announcement of the year, which might determine the immediate
future of its current program to stimulate the economy.
The Federal Open Market Committee will release a statement
at 2 p.m. (1900 GMT). Fed Chairman Ben Bernanke will follow the
announcement with his final news conference at the helm of the
U.S. central bank about 2:30 p.m.
Many expect the Fed to continue its quantitative easing
program at the current pace of $85 billion monthly asset
purchases into next year. But stronger economic data recently
has led some to believe now is the time to begin to take off the
training wheels of the recovering economy and allow it gradually
to grow on its own.
The CBOE Volatility index VIX, which usually moves
inversely to the S&P 500 index, was down 2.5 percent at 15.81.
The index gained more than 14 percent last week as investors
speculated when the Fed would start tapering its stimulus
"There is a lot of protection built into the market already.
Now people are asking, what if the Fed says exactly what is
expected? The fear (of immediate taper) is dissipating and
trades are adjusting their positions (in VIX)," said J.J.
Kinahan, chief strategist at TD Ameritrade.
A survey of fund managers by Bank of America Merrill Lynch
released on Tuesday revealed that only 11 percent of those
polled expect a taper this week.
The Dow Jones industrial average rose 48.56 points or
0.31 percent, to 15,923.82, the S&P 500 gained 1.82
points or 0.1 percent, to 1,782.82 and the Nasdaq Composite
dropped 5.522 points or 0.14 percent, to 4,018.158.
Data on Wednesday showed U.S. housing starts surged to the
highest in nearly six years in November, a sign of strength in
the housing market that could support a Fed decision to soon
start cutting back its bond purchases.
"I don't think the market should ignore these numbers as an
indication the consumer is in decent shape," said Paul Zemsky,
head of asset allocation at ING Investment Management in New
"The reaction from the market is not too strong before the
Fed, as nobody wants to take on a big position in the morning."
Shares of Lennar Corp rose 1.5 percent to $35.73
after the No. 3 U.S. homebuilder reported a 32 percent jump in
The stimulus has kept a lid on borrowing costs and flooded
markets with liquidity, boosting an equities rally. The S&P 500
closed at a record high on Dec. 9.
Apple and Micron weighed on the Nasdaq, with
the iPhone maker down 1.6 percent at $545.96 and Micron off 8.4
percent at $20.99.
Ford shares fell 7.8 percent to $15.38 after the
carmaker said it expects North American pre-tax profit to be
lower in 2014 than in 2013.
CVS Caremark said it expects sales and earnings to
rise in 2014 even though it anticipated only a "modest" benefit
next year from the launch of the Affordable Care Act, or
Obamacare. Its shares rose 2.8 percent to $68.68.
Jabil Circuit shares tumbled 21.5 percent to $15.49
a day after the contract electronics maker said it would sell
its warranty repair business and forecast current-quarter
results way below Wall Street estimates.
General Mills fell 1.4 percent to $48.94 after it
reported lower-than-expected quarterly results and said
full-year profit could come in at the lower end of its forecast.