Market waits on Fed decision

NEW YORK - Nobody wanted to stick his or her neck out Tuesday. The stock market edged slightly lower as the Federal Reserve started a two-day policy meeting that may herald the beginning of the end for its economic stimulus.

Few expect that the Fed will announce that it plans to "taper" its huge bond-buying program after its meeting wraps up Wednesday. However, good news on the U.S. economy this month, including a blockbuster jobs report, and a budget deal in Washington appeared to have increased the likelihood of a change.

"It's just the taper drama, that's really all the market seems focused on," said Dean Junkans, chief investment officer for Wells Fargo Private Bank. "The chances of them doing something tomorrow are higher than they were a month ago."

Major stock indexes fell slightly. The Standard & Poor's 500 index eased 5.54 points, or 0.31 percent, to 1,781. The Dow Jones industrial average crept down 9.31 points, or 0.06 percent, to 15,875.26. The Nasdaq composite edged lower by 5.84 points, or 0.14 percent, to 4,023.68.

The S&P 500 index dropped 1.5 percent in June when Chairman Ben Bernanke outlined a potential exit for the Fed from its stimulus strategy.

Instead of worrying about the market's immediate reaction to Wednesday's Fed's announcement, investors should focus on the positive backdrop for stocks, said Charles Schwab chief investment officer Liz Ann Sonders. "Dips that we get are not going to be terribly severe," she said.

In government bond trading, the yield on the 10-year Treasury note dropped to 2.84 percent from 2.88 percent Monday, as investors bought bonds on a day when the government said consumer prices remained flat. When prices rise, the value of bonds falls. In commodities trading, the price of gold fell $14.30, or 1 percent, to $1,230 an ounce. Oil dropped 26 cents, or 0.3 percent, to $97.22 a barrel.