Stocks Mark Time Ahead of Fed

Neither Cisco nor Disney does much to index futures.
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Updated from 6:53 a.m. EDT

Stocks drifted lower early Wednesday as traders braced for the biggest economic press release in two years.

Index futures recently showed the

S&P 500

trading a point below fair value, while the Nasdaq 100 was set for a 2-point decline. The 10-year Treasury bond was down 1/32 in price to yield 5.13%, while the dollar fell against the yen and euro.

Stock and bond trading might be subdued through the morning while the

Federal Reserve

meets in Washington. At 2:15 p.m. EDT, policymakers will announce their latest decision on interest rates and, more importantly, offer clues to whether their two-year-old tightening campaign is due for a pause.

The Fed is widely expected to raise its fed funds lever by 25 basis points to 5%, its 16th consecutive quarter-point tightening in a cycle that dates to June 30, 2004. The question for traders is what will happen when members convene again in late June. Currently, interest-rate futures see a roughly 40% chance of another rate hike then.

Following its last meeting on March 28, the Fed retained language indicating that "some further policy firming may be needed" to keep the economy balanced. Revisions to that language, or anything that echoes Chairman Ben Bernanke's mention of a rate-hike "pause" in congressional testimony last month, would be manna for stock bulls.

On Tuesday, strength in

General Motors

(GM) - Get Report

pushed the

Dow

up 55 points to 11,640, leaving it 83 points shy of its all-time high. The S&P 500 held at 1325, while the

Nasdaq Composite

fell 7 points to 2338.

The Nasdaq would be under heavier pressure Wednesday if not for the Fed meeting. That's because shares of

Cisco

(CSCO) - Get Report

fell in late trading after its fourth-quarter sales guidance left investors flat. The guidance followed discouraging words Monday night from

Dell

(DELL) - Get Report

.

For its third quarter, Cisco reported adjusted earnings of 29 cents a share on sales of $7.32 billion, both topping estimates. A bigger-than-expected revenue contribution from Scientific Atlanta goosed the top line. For the current period, however, Cisco put overall sales at $7.85 billion, barely matching the existing Wall Street consensus.

To view Ana Dane's video take on today's premarket action, click here

.

Dow-component

Disney

(DIS) - Get Report

had better news, reporting a 12% rise in second-quarter profits on the strength of its television unit and theme parks. At 37 cents a share, Disney's net wiped out estimates. Sales were just short of forecasts.

Shares of security software maker

Symantec

(SYMC) - Get Report

rose 3% late Tuesday after the company said fourth-quarter earnings slipped from a year ago to $118.8 million, or 11 cents a share, but still beat estimates.

Away from earnings, energy prices were steady ahead of a government report that is expected to show U.S. crude inventories fell by 400,000 barrels last week while gasoline stocks rose by 1.5 million barrels. June crude, which is down about 5% from its peak last week, gained 3 cents $70.72 a barrel in overnight Nymex trading.

Overseas markets were flat to lower, with London's FTSE 100 recently down 0.1% to 6103 and Germany's Xetra DAX up 0.1% to 6143. In Asia, Japan's Nikkei slid 1.4% overnight to 16,952, while Hong Kong's Hang Seng lost 0.3% to 17,081.

One stock poised to trade frenetically Fed meeting or not is

Baidu.com

(BIDU) - Get Report

, the Chinese search-engine operator that reported first-quarter earnings of $4.4 million, or 13 cents an ADS, late Tuesday, beating estimates by a penny. Baidu surged more than 20% after hours. It also reported quarterly sales of $16.9 million, tripling the year-ago amount.