Wall St dips after recent rally as Fed statement looms

By Rodrigo Campos

NEW YORK (Reuters) - U.S. stocks dipped modestly at the open on Wednesday, but held on to most of their gains over the last two days, ahead of a highly anticipated Federal Reserve statement and news conference.

The Fed will release a policy statement at 2:00 p.m. EDT (1800 GMT), which will be followed soon after by a news briefing with Chairman Ben Bernanke.

"The early morning action is not surprising given the fact that we've had two days of position jockeying ahead of the (Fed)announcement," said Andre Bakhos, director of market analytics at Lek Securities in New York.

The advance this week so far suggested investors expect reassurances of continued economic support from the U.S. central bank. The equity market had been roiled recently by indications that the Fed's asset purchases would be scaled back earlier than anticipated.

Even as volatility had spiked in the wake of Bernanke's comments to Congress May 22, which triggered investors' angst over a winding-down of quantitative easing, equity markets have mostly traded sideways. The S&P 500 is just over 1 percent below its record closing high set on May 21.

"A well perceived statement, and the upside momentum will continue," Bakhos said. "However, a statement which creates concern with Fed policy may prove to be a chance for the market to reverse its recent gains."

The Dow Jones industrial average fell 23.81 points or 0.16 percent, to 15,294.42, the S&P 500 lost 2.89 points or 0.17 percent, to 1,648.92 and the Nasdaq Composite dropped 2.1 points or 0.06 percent, to 3,480.08.

Fed policymakers will likely announce that they will keep buying bonds at a monthly pace of $85 billion, while keeping their options open to scaling back the stimulus program later this year if the U.S. labor market continues to improve.

Shares of Adobe Systems Inc rose 7.9 percent to $46.80 a day after the maker of Photoshop and Acrobat software reported a higher-than-expected adjusted quarterly profit and said demand rose for Creative Cloud, the subscription-based version of its flagship software package.

FedEx Corp reported higher quarterly profit than expected as its ground shipment business improved and due to lower jet fuel prices. Shares were up 1.4 percent at $100.88 in early trading.

Other S&P 500 companies scheduled to report earnings on Wednesday include Jabil Circuit Inc , Micron Technology Inc and Red Hat Inc .

Japan's SoftBank cleared a major hurdle in its attempt to buy U.S. wireless provider Sprint Nextel , as rival bidder Dish Network declined to make a new offer after SoftBank sweetened its own bid last week. Sprint shares fell 3.6 percent to $7.06.

(Editing by Bernadette Baum)