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U.S. Stocks Seeing Modest Weakness Ahead Of Fed Announcement

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Stocks came under pressure early in the trading day on Wednesday, offsetting the upward move seen late in the previous session. The major averages have climbed off their worst levels since then but remain in negative territory.

Currently, the major averages are posting modest losses. The Dow is down 40.17 points or 0.2 percent at 27,070.63, the Nasdaq is down 19.71 points or 0.2 percent at 8,166.30 and the S&P 500 is down 6.09 points or 0.2 percent at 2,999.61.

The modest weakness on Wall Street comes as traders look ahead to the Federal Reserve's monetary policy announcement this afternoon.

Economists widely expect the Fed to cut interest rates by another 25 basis points, with CME Group's FedWatch Tool currently indicating a 70.4 percent chance of a quarter point rate cut.

Traders are likely to pay closer attention to the Fed's accompanying statement, looking for clues about the likelihood of future rate cuts.

Ahead of the Fed announcement, the Commerce Department released a report showing a substantial rebound in new residential construction in the U.S. in the month of August.

The report said housing starts soared by 12.3 percent to an annual rate of 1.364 million in August after slumping by 1.5 percent to a revised rate of 1.215 million in July.

Economists had expected housing starts to surge up by 5 percent to a rate of 1.250 million from the 1.191 million originally reported for the previous month.

The Commerce Department said building permits also spiked by 7.7 percent to an annual rate of 1.419 million in August after jumping by 6.9 percent to a revised rate of 1.317 million in July.

Building permits, an indicator of future housing demand, had been expected to drop by 2.7 percent to a rate of 1.300 million from the 1.336 million originally reported for the previous month.

Transportation stocks are turning in some of the market's worst performances in morning trading, dragging the Dow Jones Transportation Average down by 1.6 percent.

Delivery giant FedEx (FDX) is leading the sector lower after reporting weaker than expected fiscal first quarter results and slashing its full-year guidance.

A continued pullback by the price of crude oil is also weighing on energy stocks, although most of the other major sectors are showing more modest moves.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index dipped by 0.2 percent, while China's Shanghai Composite Index rose by 0.3 percent.

The major European markets have also turned mixed on the day. While the U.K.'s FTSE 100 Index has dipped by 0.2 percent, the French CAC 40 Index and the German DAX Index are both up by 0.1 percent.

In the bond market, treasuries are extending the upward move seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 4.9 basis points at 1.763 percent.

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