US stocks subdued as investors eye trade talks, Fed meeting

U.S. stocks were little changed on Wednesday as investors weighed the latest developments in trade talks between the United States and China while waiting for minutes from the Federal Reserve's January policy-setting meeting.

President Donald Trump said on Tuesday that trade discussions with China were going well and suggested he was open to extending the deadline to complete the negotiations, saying March 1 was not a "magical" date. Up to now, it was assumed U.S. tariffs on $200 billion worth of Chinese imports would rise to 25 per cent from 10 per cent if no trade deal was reached by then.

"A market-friendly outcome this week will be for both sides to agree on extending the March 1 deadline, which should provide more time for finding a middle ground on trade policy," FXTM analyst Lukman Otunuga wrote in a client note. "Trump stating that the talks are 'very complex' and the current March deadline is not a 'magical date', a breakthrough deal is still some distance away."

The Federal Open Market Committee is slated to release minutes from its January meeting at 2 p.m. ET (1900 GMT), offering more clues on monetary policy. The minutes are expected to reaffirm the Federal Reserve's statement last month that it would be "patient" with further rate hikes after markets swooned late in December on fears of an economic slowdown. The financial sector dropped 0.29 per cent.

"Investors expect more details regarding the shrinking of the Fed's balance sheet and obviously more clues on the Fed pause," Peter Cardillo, chief market economist at Spartan Capital Securities, wrote in a client note.

The benchmark S&P 500 index has climbed about 18 per cent from its December lows, fueled by optimism on trade, a largely upbeat fourth-quarter earnings season and a dovish Fed. Gains in Apple Inc and chipmakers put the Nasdaq Composite index on track to rise for the eighth day.

At 9:53 a.m. ET the Dow Jones Industrial Average was up 10.31 points, or 0.04 per cent, at 25,901.63. The S&P 500 was down 0.06 points, or 0.00 per cent, at 2,779.70 and the Nasdaq Composite was up 15.12 points, or 0.20 per cent, at 7,501.88. The healthcare sector fell 0.44 per cent, weighed by an 8.7 per cent fall in shares of CVS Health Corp. The drugstore chain operator missed a full-year profit forecast due to weakness in its long-term healthcare services business.

Southwest Airlines Co slipped 5.2 per cent after the carrier cut its forecast for first-quarter revenue per seat mile on weak passenger demand and a $60 million hit from the partial U.S. government shutdown. The carrier dragged down shares of other airlines, sending the Dow Jones US Airlines index down 2.66 per cent.

Garmin Ltd jumped 14 per cent, the most on the S&P, after forecasting full-year results above expectations and reporting strong quarterly earnings on higher demand for its smartwatches and navigation systems. Advancing issues outnumbered decliners by a 1.17-to-1 ratio on the NYSE and by a 1.17-to-1 ratio on the Nasdaq. The S&P index recorded 16 new 52-week highs and no new lows, while the Nasdaq recorded 52 new highs and eight new lows.