US stocks sluggish ahead of Fed meeting

US stocks barely moved today while investors awaited the Federal Reserve’s decision on interest rates.

There was also unsettling developments at insurance broker Marsh & McLennan Cos. and drugmaker Merck & Co.

While the Fed’s policy committee is expected to boost interest rates again tomorrow’s meeting as another pre-emptive strike against inflation, questions remain over what signals the central bank might issue on the overall economy in its policy statement.

Robert Christian, chief investment officer at Wilmington Trust, said the market had already factored in a rate increase but was anxious about what the Fed might say about the economy, including the inflationary impact of the dollar’s recent decline.

A weaker dollar makes imports more expensive.

“The issue is going to be the rhetoric they use around the rate increase,” Christian said.

Some investors, he said, were worried that the dollar’s fall might prompt the Fed to move more aggressively than it would otherwise. Higher rates would make US investments more attractive, helping boost demand for the dollar versus other currencies.

The Dow Jones industrial average was down 4.94, or 0.05%, at 10,386.37.

Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index slipped 0.81, or 0.07%, to 1,164.08, while the Nasdaq composite index was up 4.08, or 0.2%, at 2,043.33.

The market’s unease was tempered by a strong drop in crude oil futures, which continued their abrupt downward trend of recent weeks. A barrel of light crude settled at 47.37, down 1.72, on the New York Mercantile Exchange.

Marsh & McLennan was down 56 cents at 26.80 after the company posted disappointing quarterly results and said it would cut 3,000 jobs, or about 5% of its workforce, amid the continuing fallout over charges of insurance bid-rigging by New York Attorney General Eliot Spitzer.

Marsh also said it had reached a tentative 40 million settlement with the Securities and Exchange Commission over questionable brokerage allocation practices at its asset management firm, Putnam.

Merck was down 57 cents at 26 as the Dow’s biggest decliner after disclosing late on Monday that the Securities and Exchange Commission and the Justice Department were examining the company’s handling of Vioxx.

Merck recently pulled the leading arthritis drug off the market after studies showed it increased the risk of heart attacks.

Elsewhere in the Dow, Caterpillar was up 1.30 at 88.31 as the measure’s biggest gainer, followed by Boeing, up 64 cents at 52.51.

Cisco Systems was down 22 cents at 19.75 in anxious trading before the technology bellwether’s quarterly profit report, which came in after the close.

Shares of the networking giant shed another 35 cents to 19.40 in after-hours trading prior to the announcement.

The market also was digesting other earnings news as the third-quarter reporting season entered its final stages.

Satellite TV broadcaster EchoStar Communications was up 69 cents at 30.71 after reporting that its earnings nearly tripled as the company added about 350,000 new subscribers.

EchoStar also said it would pay a one-time dividend of 1 a share, or a total of 455 million, next month.

Cablevision Systems was up 46 cents at 20.49 after the Long Island, New York-based cable TV provider reported a much narrower third-quarter loss than Wall Street had been expecting.

Advancing issues outnumbered decliners by about 5 to 4 on the New York Stock Exchange, while Nasdaq advancers led by a slim margin.

NYSE volume totalled 1.45 billion shares, compared with 1.36 billion on Monday.

The Russell 2000 index, which measures smaller company performance, was up 4.56, or 0.76%, at 606.64.