S&P 500 hovers near unchanged as focus turns to Fed

NEW YORK (Reuters) – U.S. stocks were near flat on Tuesday as investors became cautious ahead of the Federal Reserve’s policy decision, while a historic U.S.-North Korea summit failed to impress investors.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 29, 2018. REUTERS/Brendan McDermid

The Fed is widely expected to raise interest rates for the second time this year, when it concludes its policy meeting on Wednesday.

With borrowing costs returning to more normal levels, investors are focused on how the Fed characterizes its monetary policy, while looking for hints if it would move to raise rates three or four times this year.

“There’s a little bit of hesitancy going into the Fed meeting. People are unsure what the Fed is going to say,” said Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth LLC in New York.

“I don’t think they’re going to say anything particularly related to a rate hike in December. If they say a little too much about inflation, that’s going to give the market a reason to get concerned.”

Data on Tuesday showed U.S. consumer prices rose marginally in May as gasoline price increases slowed and the underlying trend continued to suggest moderate inflation in the economy.

President Donald Trump and North Korean leader Kim Jong Un pledged to work toward complete denuclearization of the Korean peninsula, but their joint statement gave few details on how the goal would be achieved.

At 3:05 p.m. ET, the Dow Jones Industrial Average fell 45.77 points, or 0.18 percent, to 25,276.54, the S&P 500 gained 0.03 points, or 0.00 percent, to 2,782.03 and the Nasdaq Composite added 22.66 points, or 0.3 percent, to 7,682.59.

While defense stocks such as Raytheon, Lockheed Martin and Northrop Grumman took a hit,

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