Stocks trading in a tight range as Federal Reserve is expected to hold rates steady

Stocks narrowly mixed ahead of Fed rate decision

NEW YORK — Stocks moved in a tight range Wednesday as investors avoid making any big bets before the Federal Reserve gives its latest assessment of the economy.

Investors will be looking to the Fed’s take on the economy for clues on whether policymakers still expect a slow recovery. The central bank is widely expected to keep interest rates steady following its two-day meeting that wraps up Wednesday afternoon.

The Fed has said rates will remain low indefinitely as it tries to help a recovery. But the central bank has also indicated the economy is improving, so any further indications of growth would be a welcome sign for a market that has been choppy and volatile in recent weeks.

Low rates help the stock market because they give investors few alternatives for big profits aside from stocks. A low federal funds rate helps limit returns in the bond market.

High unemployment and continued weakness in the housing market are two of the primary reasons the Fed has been able to keep rates low. Uncertainty surrounding a recovery in the jobs and housing markets have cast doubt on the pace of the economic recovery. Reports on employment and home sales have disappointed investors so far this month.

The Commerce Department is scheduled to release a new report Wednesday that will say sales of new homes dropped in May. It is the first report on new home sales since a home buyer tax credit expired on April 30.

Economists polled by Thomson Reuters forecast sales of new homes fell nearly 19 percent in May to a seasonally adjusted annual rate of 410,000. The report is due at 10 a.m. EDT.

It would be the second straight day a report showed weakening in the housing market following the expiration of the homebuyer tax credit.

Stocks have fallen two days in a row to hold onto early morning gains. An unexpected drop in sales of existing homes and the White House’s vow to fight a court ruling overturning a ban on offshore drilling drove major indexes lower Tuesday.

In the first half-hour of trading, the Dow Jones industrial average rose 1.14, or less than 0.1 percent, to 10,294.66. The broader Standard & Poor’s 500 index fell 2.21, or 0.2 percent, to 1,093.10, and the Nasdaq composite index fell 6.95, or 0.3 percent, to 2,254.85.