Stocks Slide Ahead of AIG and Fed

Stocks opened lower Wednesday, retracing the previous session's rally, as investors were jittery ahead of the AIG CEO's appearance on Capitol Hill today and the Federal Reserve's statement after a two-day meeting.

The Nasdaq's decline was smaller than those on both the Dow and S&P as Sun Microsystems surged more tan 60 percent following news that the company is in talks with IBM to buy Sun for at least $6.5 billion in cash.

The morning's economic news had little effect on the market.

Consumer prices rose 0.4 percentin February, the biggest monthly gain since July. Excluding volatile food and energy costs, core CPI was up just 0.2 percent.

Both CPI numbers came in about 0.1 percent above expectations. Tony Crescenzi of Miller Tabak pointed out that an increase in car prices contributed 0.1 percent to the overall number, which could explain the miss.

The CPI report came in contrast to yesterday's PPI report, which showed producer prices rose 0.1 percent in February, as energy prices moderated.

The current account deficit narrowed sharply to $132.8 billion in the fourth quarter from an upwardly revised $181 billion in the third quarter.

It's a sign of the times that an expected grilling of AIG CEO Edward Liddy will likely garner more attention than what the Federal Reserve has to say.

But interest rates are expected to stay at the target of between 0 percent and 0.25 percent and economists say it's unlikely the Federal Open Market Committee will announce any new plans for the economy.

It would be nice to see a statement about any Fed plans for "quantitative easing" and buying Treasurys "but it appears in the last few weeks there is something holding them back," Jim O'Neill, head of global economic research at Goldman Sachs, said on CNBC.

The Fed likely wants to hold off buying Treasurys as long as possible, and right now it will get "more bank for its buck in the mortgage market" helping to stem foreclosures and defaults," Simon Grose-Hodge, director of investment strategy at LGT Bank in Liechtenstein, added.

The Fed announcement will arrive at 2:15 pm ET.

Meanwhile, hearings on AIG at the House Financial Services Committee will start at 10 am, as Congress looks for ways to prevent bonuses going to many employees in AIG Financial Products that were involved in the credit default swap crisis that endangered the company. ( will stream the hearing live.)

CEO Liddy addressed the backlash against the bonuses in an Op-Ed in the Washington Post Wednesday, saying that paying the retention bonuses was necessary, but distasteful.

Citigroup and Bank of America continued to barrel higher even amid news that Citi is losing chief economist Lewis Alexander to the Treasury Department.

Shares of CNBC parent General Electric eased as the company prepares to give investors a full accounting Thursday of its commercial real-estate portfolio.

General Motors shares slipped amid speculation about whether or not the troubled auto maker will file for banruptcy, with CEO Rick Wagoner saying he now is warming to the idea.

Coca-Cola shares slipped after China rejected its $2.4 billion bid for Huiyuan Juice.

As the last of the first-quarter earnings reports trickle in, Darden Restaurants reported that it beat analyst estimates even as net income fell 15 percent. The company raised its view for the full year but said sales would be flat or slightly lower.

Still to Come:

WEDNESDAY: Weekly crude prices; Chicago Midwest manufacturing index; Earnings from Oracle and Nike; Fed decision on interest rates; House hearing on AIG
THURSDAY: Weekly jobless claims; leading indicators; Philly Fed survey; Earnings from FedEx; GE to provide details on GE Capital
FRIDAY: Quadruple witching; Fed's Bernanke speaks about financial crisis at bankers' convention in Phoenix