S&P 500 hovers near unchanged as focus turns to Fed

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks were near flat on Tuesday as investors became cautious ahead of the Federal Reserve's policy decision, while a historic U.S.-North Korea summit failed to impress investors.

The Fed is widely expected to raise interest rates for the second time this year, when it concludes its policy meeting on Wednesday.

With borrowing costs returning to more normal levels, investors are focused on how the Fed characterizes its monetary policy, while looking for hints if it would move to raise rates three or four times this year.

"There's a little bit of hesitancy going into the Fed meeting. People are unsure what the Fed is going to say," said Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in New York.

 

"I don't think they're going to say anything particularly related to a rate hike in December. If they say a little too much about inflation, that's going to give the market a reason to get concerned."

Data on Tuesday showed U.S. consumer prices rose marginally in May as gasoline price increases slowed and the underlying trend continued to suggest moderate inflation in the economy.

President Donald Trump and North Korean leader Kim Jong Un pledged to work towards complete denuclearization of the Korean peninsula, but their joint statement gave few details on how the goal would be achieved.

At 3:05 p.m. ET, the Dow Jones Industrial Average <.DJI> fell 45.77 points, or 0.18 percent, to 25,276.54, the S&P 500 <.SPX> gained 0.03 points, or 0.00 percent, to 2,782.03 and the Nasdaq Composite <.IXIC> added 22.66 points, or 0.3 percent, to 7,682.59.

While defence stocks such as Raytheon , Lockheed Martin and Northrop Grumman took a hit, the broader markets saw little impact from the summit.

Tesla Inc shares were up 3.0 percent after it said it is cutting several thousand jobs across the company.

The market awaits a court ruling, expected after the closing bell, that would decide the fate of AT&T's Inc $85 billion offer for Time Warner .

Charter Communications jumped 3 percent, while the S&P media index <.SPLRCME> was up 0.5 percent.

Twitter gained 4.6 percent after J.P. Morgan raised its price target on the stock by $11 to $50, saying it was confident about the company's advertising revenue growth.

Declining issues outnumbered advancing ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favoured advancers.

The S&P 500 posted 41 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 139 new highs and 22 new lows.

(Additional reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva and Chizu Nomiyama)