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US stocks set to edge higher ahead of Fed decision

U.S. stock-index futures ticked up ahead of the eagerly awaited outcome of the U.S. Federal Reserve's final policy meeting of the year, as investors attempted to second-guess what the Federal Open Market Committee (FOMC) would announce on Wednesday.

Stock futures held modest gains after the government reported better-than-expected increases in housing starts and permits for November.

The Fed will decide whether to continue or reduce its $85 billion monthly bond-buying program at the end of a two-day meeting. The central bank has pledged to carry on with its stimulus schedule until the labor market has improved significantly, and with U.S. unemployment sinking from 7.3 to 7 percent in November, some investors believe change is to be expected.

U.S. stocks closed slightly lower on Tuesday with investors reluctant to make decisive moves.

For most of 2013, there has been consistent chatter in the markets about when the Fed will begin its taper. The FOMC is scheduled to make an announcement, along with forecasts, at 2 p.m. ET, with Fed Chairman Ben Bernanke giving what could be his last press conference at 2:30 ET.

"Given that the S&P 500 has pretty much flat-lined since early-mid November in spite of better data, one would have to say that some risk of tapering has been priced in but perhaps not all of it," Deutsche Bank's Jim Reid said in a morning note.

"Alternatively if they don't taper one would expect markets to see a pretty decent relief rally over the rest of the year. So will it be Santa or Scrooge from the Fed?"

Elsewhere, Asian stocks were mostly higher on Wednesday but sentiment was cautious with investors reluctant to make decisive moves before the Fed's policy outcome. European equities were also trading higher on Wednesday.



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