(For a live blog on the U.S. stock market, click or type LIVE/ in a news window.)
* Fed policy decision expected at 2:00 p.m. ET
* FedEx tumbles after profit warning; drags down UPS shares
* Adobe down after tepid revenue forecast
* Indexes down: Dow 0.22%, S&P 0.27%, Nasdaq 0.33% (Adds comment, details; updates prices)
Sept 18 (Reuters) - U.S. stocks came under pressure on Wednesday after a profit warning by FedEx, while investors waited for a decision on interest rates and clues on the future of U.S. monetary policy from the Federal Reserve.
Shares of the package delivery company tumbled 14% and were on course for their sharpest one-day percentage drop since the financial crisis after FedEx blamed U.S.-China trade tensions and a split with Amazon.com Inc for its dismal full-year profit forecast.
The stock was the biggest drag on the S&P 500 and drove a 1.9% drop in shares of rival United Parcel Service Inc .
The Dow Jones Transport Average lost 1.78%, while the broader industrial sector was off 0.7%. The sector was the biggest decliner among eight of the 11 major S&P sectors in the red.
Investors are now waiting for the Fed’s policy statement, due at 2:00 p.m. ET (1800 GMT), followed by Chair Jerome Powell’s address a half hour later.
The central bank is expected to lower interest rates by a quarter percentage point for the second time in three months, but a deep divide among policymakers has led traders to abandon all bets on a third reduction this year.
“The market is likely seeking confirmation from the Fed that the cuts in July and likely this afternoon are not simply a mid-cycle adjustment and that the FOMC stands ready to take aggressive action if needed,” said Ryan Larson, head of equity trading at RBC Global Asset Management in Chicago.
Earlier in the day, the central bank injected more cash into the banking system as the key interest rate pierced above its targeted range for the first time since the financial crisis. That puts pressure on policymakers to come up with long-term fixes for the funding squeeze.
In response, trader bets for a 25 basis point reduction in interest rates shot back up to 72.7% after falling to nearly 50% on Tuesday, according to CME Group’s FedWatch tool.
The interest-rate sensitive banking index slipped 0.49% and was on pace for a third day of losses.
Expectations of lower rates have spurred a Wall Street rally this year, with the benchmark S&P 500 now about 1% below its all-time high hit in July.
At 11:25 a.m. ET, the Dow Jones Industrial Average was down 60.42 points, or 0.22%, at 27,050.38, the S&P 500 was down 8.17 points, or 0.27%, at 2,997.53. The Nasdaq Composite was down 26.96 points, or 0.33%, at 8,159.06.
Adobe Inc fell 2.3% after the Photoshop software maker forecast tepid revenue for the current quarter.
In a bright spot, Versace-owner Capri Holdings Ltd rose 2% as Jefferies raised its price target on the stock.
Declining issues outnumbered advancers for a 1.47-to-1 ratio on the NYSE and a 1.84-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and one new low, while the Nasdaq recorded 31 new highs and 22 new lows. (Reporting by Medha Singh and Ambar Warrick in Bengaluru; Editing by Anil D’Silva)
Our Standards: The Thomson Reuters Trust Principles.