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Futures hold steady after housing starts; Fed remains in Focus

U.S. stock index futures continued to hover around the flatline Wednesday ahead of the Federal Reserve's announcement on the future of its economic stimulus program.

The Fed is expected to make its announcement at 2pm ET following its two-day policy meeting and is expected to announce a $10-$15 billion reduction to its $85 per month asset purchase program. Fed Chairman Ben Bernanke is slated to hold a press conference at 2:30 pm ET. (CNBC.com will be streaming the press conference live.)

(Read more: Goldman's Blankfein: Fed should taper bond buying)

Bernanke is expected to outline the Fed's forecasts for 2016 for the first time, and his speech will also be combed for any hints of who might be named as his successor. Vice Chair Janet Yellen is considered the forerunner, since former Treasury Secretary Larry Summers withdrew his bid over the weekend.

"Any decision to taper quantitative easing is expected to be accompanied by a relatively dovish policy stance to dampen expectations of future rate hikes from the Fed," said Bank of Tokyo-Mitsubishi's Lee Hardman in a research note. The Fed currently predicts it will not raise interest rates until 2015.

(Read more: Fall of Summers points to a government shutdown)

On the economic front, housing starts rose less than expected, increasing 0.9 percent to a seasonally adjusted annual rate of 891,000 units in August, according to the Commerce Department. July's starts were revised down to show a 883,000-unit pace instead of the previously reported 896,000 units. Economists polled by Reuters expected a reading of 917,000 units.

The Mortgage Bankers Association said home loan applications rose 11.2 percent, after slumping 13.5 percent last week.

The Energy Information Administration will report oil inventories at 10:30 am ET.

Among earnings, FedEx rallied after the package delivery company posted quarterly results that edged above expectations. Rival UPS also ticked higher.

General Mills posted lower quarterly earnings, but shares of the cereal maker rose after it said sales rose thanks to the addition of new businesses.

Adobe Systems reported disappointing quarterly earnings and revenue. However, shares of the software maker jumped following news that it is seeing strong demand for its Creative Cloud service.

Enterprise software maker Oracle is slated to post earnings after the closing bell.

Caterpillar slipped after Baird Equity Research downgraded the heavy-equipment maker to "neutral" form "outperform," pointing to 2014 growth prospects that are likely "subdued."

—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

On Tap This Week:

WEDNESDAY: Oil inventories, FOMC mtg announcemnet, FOMC forecasts, Bernanke press conference, Apple iOS 7 available; Earnings from Oracle
THURSDAY: Jobless claims, current account, existing home sales, Philadelphia Fed survey, leading indicators, natural gas inventories, Fed's Pianalto speaks, Fed balance sheet/money supply, Microsoft analyst mtg, Nike shareholder mtg, weekly rail numbers; Earnings from ConAgra, Rite Aid
FRIDAY: Fed's George speaks, Fed's Bullard speaks, Fed's Kocherlakota speaks, quadruple witching, new iPhones in stores

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