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Stocks Showing A Lack Of Direction In Early Trading - U.S. Commentary

With traders reluctant to make any significant moves, stocks are turning in a lackluster performance in early trading on Wednesday. The major averages are lingering near the unchanged line after ending the previous session sharply higher.

The major averages are currently turning in a mixed performance, with the Nasdaq posting a modest gain. While the Nasdaq is up 1.70 points or 0.1 percent at 2,931.46, the Dow is down 18.39 points or 0.1 percent at 12,818.94 and the S&P 500 is down 1.76 points or 0.1 percent at 1,356.22.

The choppy trading on Wall Street comes as many traders have moved to the sidelines ahead of the Federal Reserve's monetary policy announcement later this afternoon.

Stocks have moved notably higher in recent sessions amid optimism that the Fed will announce additional measures to stimulate the sluggish economy in light of a recent batch of disappointing U.S. economic data as well as the ongoing financial crisis in Europe.

Many analysts expect the Fed to announce an extension of "Operation Twist," which involves replacing short-term securities in the Fed's bond portfolio with longer-term securities in an effort to push already low long-term interest rates even lower.

Peter Boockvar, managing director at Miller Tabak, said, "Putting aside what they should do, what they will do is something, because the last thing they did is expiring."

"If twisting is all we get, if at all, stocks are a sell on the news, because I believe the only thing keeping this rally alive are the hopes and wishes for bailout/easing help," he added. "It is certainly not on the outlook for global economic growth."

Following the release of the statement, the Fed's revised economic forecasts may attract some attention along with Chairman Ben Bernanke's press conference.

Most of the major sectors are showing only modest moves, although considerable weakness has emerged among gold stocks. Reflecting the weakness in the gold sector, the NYSE Arca Gold Bugs Index has tumbled by 2.2 percent.

The weakness among gold stocks comes amid a decrease by the price of the precious metal, with gold for August delivery sliding $15.70 to $1,607.50 an ounce.

While railroad stocks are also seeing some early weakness, moderate strength is visible among semiconductor stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday, benefiting from the overnight rally on Wall Street. Japan's Nikkei 225 Index surged up by 1.1 percent, while Hong Kong's Hang Seng Index rose by 0.5 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the French CAC 40 Index has edged down by 0.2 percent, the German DAX Index is up by 0.1 percent and the U.K.'s FTSE 100 Index is up by 0.3 percent.

In the bond market, treasuries have moved notably lower ahead of the announcement from the Fed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.4 basis points at 1.664 percent.

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