Investors await today’s Fed decision

Nervous investors sent stocks lower Wednesday as they anxiously awaited the Federal Reserve’s decision on interest rates and looked past an increase in U.S. oil inventories and a solid advance in the gross domestic product.

“We’re just waiting for news tomorrow,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. “Traders are like kids in the back seat of the car saying, ‘Are we there yet? Are we there yet?’ The traders are saying, ‘Is the report out? Is the report out?’ “

Investors sent stocks up in the morning on falling oil prices and a Commerce Department report that the economy grew at an annual rate of 3.8 percent in the first quarter of 2005.

But the two-day meeting of the Fed’s Open Market Committee, which sets the central bank’s interest rate policy, weighed on the market. The Fed’s decision, and its accompanying statement assessing the economy, was expected this afternoon.

The Dow Jones industrial average fell 31.15, or 0.30 percent, to 10,374.48. The Dow gained 114.85 Tuesday.

Broader stock indicators fell slightly. The Standard & Poor’s 500 index was down 1.72, or 0.14 percent, at 1,199.85 and the Nasdaq composite index fell 1.00, or 0.05 percent, to 2,068.89.

Bonds were barely changed, with the yield on the 10-year Treasury note at 3.98 percent, up from 3.97 percent late Tuesday. The U.S. dollar was down against the euro, while gold prices rose.

Wall Street has had two preoccupations in recent weeks — interest rates and oil prices.

Most investors expect the Fed to raise rates today, the ninth rate hike in a year. More significantly, they’re hoping for a sign, when the Open Market Committee releases its policy statement, that the increases will soon come to an end.

The market’s anxiety about the Fed had investors ignoring a drop in crude oil prices — an event that normally would give stocks a lift. Oil futures fell 12 cents to $57.14 a barrel on the New York Mercantile Exchange after the Energy Department reported a substantial increase in gasoline production and lesser increases in oil imports and commercial crude inventories.

The Russell 2000 index of smaller companies rose 1.28, or 0.20 percent, to 642.76.

Advancers led decliners roughly 9 to 6 on the New York Stock Exchange, where volume was 1.35 billion, down from 1.36 billion at the same point Tuesday.

Overseas, Japan’s Nikkei stock average rose 0.55 percent. Britain’s FTSE 100 was up 0.37 percent, Germany’s DAX index was up 0.57 percent, and France’s CAC-40 was up 0.90 percent.