• The consumer price index fell 0.1% in May after dropping 0.8% in April
  • Mortgage applications climbed 5% last week from the prior week and were up 13% from a year ago
  • FOMC to release policy statement at 2 p.m. EDT.

Update: 12:05 p.m. EDT:

U.S. stocks were mixed as of noon Wednesday.

The Dow Jones Industrial Average dropped 173.82 points to 27,098.48, while the S&P 500 fell 11.08 points to 3,196.10 and the Nasdaq Composite Index rose 47.3 points to 10,001.05.

In Europe markets finished lower, as Britain’s FTSE-100 slipped 0.1%, while France’s CAC-40 dropped 0.82% and Germany’s DAX fell 0.7%.

Original story:

U.S. stocks opened mixed on Wednesday, a head of a statement from the Federal Reserve on the state of the economy at 2 p.m. EDT.

The Dow Jones Industrial Average dropped 18.25 points to 27,254.05, while the S&P 500 gained 5.4 points to 3,212.58 and the Nasdaq Composite Index rose 63.46 points to 10,017.22.

The Federal Open Market Committee is unlikely to enact any policy or monetary shifts as its benchmark interest rate is near zero – but traders will look for the central bank’s comments on the economy and how long they will maintain ongoing stimulus measures.

“ I think the Fed will keep leaning on the side of being accommodative. In no way will it signal an end to that and in no way will it signal reluctance to be an implicit partner with the U.S. Treasury in supporting the proper and full functioning of various markets, including the Treasury market,” said Tony Crescenzi, vice president and member of PIMCO’s investment committee.

Strategists at Credit Agricole CIB led by Jean-Francois Paren stated: “Markets have been cautious before the Fed meeting and technical indicators are stretched after the recent powerful rally. For now, it sounds like yield-curve control is the necessary condition for markets to further rally, but it may not be sufficient by itself as it also highlights the fragility of the system we are now living in.”

The U.S. Bureau of Labor Statistics reported Wednesday that its consumer price index declined 0.1% in May on a seasonally adjusted basis after dropping 0.8% in April.

The Mortgage Bankers Association said applications for home loans climbed 5% last week from the prior week and were up 13% from a year ago.

“The recovery in the purchase market continues to gain steam, with the seasonally adjusted index rising to its highest level since January,” said Joel Kan, an MBA economist. “Purchase activity increased for the eighth straight week.”

The Organization for Economic Co-operation and Development warned the global economy could shrink by 7.6% this year if a second outbreak of covid-19 strikes.

China’s producer price index fell 3.7% in May from a year earlier, while Japan’s wholesale prices dropped 2.7% from a year ago.

“After such a ferocious run in recent weeks, the [U.S.] stock market was overdue for a correction or at least a pause,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “Upside price momentum was becoming extreme and sentiment indicators a bit too bullish. Profit-taking won over [Tuesday], particularly in those economically sensitive areas which have done the best in recent weeks.”

Paulsen added: “Being overweight stocks most sensitive to an economic revival worked well in recent weeks but not earlier in the year and not today. Alternatively, owning high-growth, new-era stocks worked well earlier in the year and did very well today but not in the last couple weeks.”

Nancy Davis, founder of Quadratic Capital Management, based in Greenwich, Conn., said the stock and bond markets are telling two very different stories.

“Stocks are near record highs, while the bond market is pricing in an apocalypse with yields at historically low levels,” she said. “One of these markets is in for a rude awakening. Government bonds are all risk and no reward. The only possible argument for buying 10-year Treasuries is if yields move into negative territory, but negative rates are unlikely if the economy rebounds faster than expected.”

Overnight in Asia, markets finished mixed. The Shanghai Composite fell 0.42%; Hong Kong’s Hang Seng slipped 0.03%; while Japan’s Nikkei-225 edged up 0.15%.

In Europe markets traded slightly higher, as Britain’s FTSE-100 gained 0.27%, while France’s CAC-40 inched up 0.03% and Germany’s DAX edged up 0.1%.

Crude oil futures dropped 1.46% at $38.77 per barrel, Brent crude fell 1.31% at $41. Gold futures gained 0.57%.

The euro edged up 0.26% at $1.1368 while the pound sterling rose 0.31% at $1.2767.