By Tanya Agrawal
REUTERS - Wall Street was little changed at the open on Thursday, with investors reluctant to trade ahead of the Federal Reserve's interest rate decision later in the day.
The Fed will announce the outcome of its policy meeting and release its latest economic projections at 2 p.m. ET (1800 GMT), followed by a news conference by Chair Janet Yellen at 2:30 p.m.
An increase in the Fed's benchmark rate, which has been near zero since the depths of the financial crisis in December 2008, would be the first since 2006.
The low rates have helped nurse the economy back to health since the crisis and underpinned a spectacular six-year bull run for stocks. However, there are concerns that continuing with ultra-low rates for too long could lead to asset bubbles such as the one in property prices that led to the last recession.
Fed fund futures indicate a 30 percent chance the central bank will raise rates on Thursday, while 35 of 80 economists polled by Reuters expect a move.
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"Investors are in wait-and-see mode," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
Any reaction to whatever the Fed does on Thursday is likely to be short-lived, he said. "The real reaction is going to be felt in the coming weeks as we look at corporate earnings, economic activity and other factors."
Whether or not the Fed raises rates on Thursday, investors will be hanging on every word during Yellen's news conference.
If the Fed does not move, the focus will shift to its next meeting on Oct. 27-28.
Uncertainty about when the Fed will switch gears has dogged Wall Street for months - a situation that has been complicated in recent weeks by market turbulence linked to slowing growth in China and worries about the health of the global economy.
However, many analysts say a rate hike now would at least remove a lot of the uncertainty that has troubled investors.
"The approaching Fed meeting is paralyzing activity and that probably will persist until (the announcement)," J.P. Morgan said in a note to clients ahead of start of trading.
At 9:35 a.m. ET the Dow Jones industrial average was down 8.42 points, or 0.05 percent, at 16,731.53, the S&P 500 was down 1.96 points, or 0.1 percent, at 1,993.35 and the Nasdaq Composite index was down 4.00 points, or 0.08 percent, at 4,885.24.
Six of the 10 major S&P sectors were lower, with the telecommunications index's 1.88 percent loss leading the decliners.
Verizon's 2.9 percent fall weighed the most on the Dow and the S&P. The company said it expected 2016 earnings to "plateau" amid stiff competition.
The CBOE volatility index, known as Wall Street's "fear gauge", was down marginally at 21.36, just above its long-term average of 20.
Energy stocks pushed Wall Street higher on Wednesday after an almost 6-percent jump in oil prices, but trading was thin. Oil prices were little changed on Thursday.
"As it stands now considering (Wednesday's) market rally, the bearish decision will be for the Fed not to hike," Mike O'Rourke, chief market strategist at Jones Trading, said in a note.
The Fed has said it will raise rates when it sees a sustained recovery in the economy.
Data on Thursday showed the number of Americans filing new applications for unemployment benefits fell last week to the lowest level in eight weeks.
Other data showed that housing starts fell more than expected in August, but a rebound in building permits pointed to sustained strength in the housing market, which should support economic growth.
Shares of Cablevision jumped 15.7 percent to $33.01 after European telecoms group Altice agreed to buy the company in a deal valued at $17.7 billion.
Oracle was down 2.9 percent at $37.13 a day after the company warned that revenue could fall in the current quarter.
Rite Aid was down 5.9 percent at $8.08 in heavy trading after the drugstore chain operator cut its full-year sales and earnings forecasts.
Declining issues outnumbered advancing ones on the NYSE by 1,500 to 1,060. On the Nasdaq, 1,269 issues fell and 849 rose.
The S&P 500 index showed four new 52-week highs and no new lows, while the Nasdaq recorded 11 new highs and 11 new lows.
(Reporting by Tanya Agrawal; Editing by Ted Kerr)