U.S. Stocks Solidify Gains As Price Of Oil Drops

NEW YORK (MarketWatch) -- U.S. stocks on Wednesday solidified gains as the price of crude oil slid to under $133 a barrel, with investors awaiting comments from the Federal Reserve, which is expected to voice worries about inflation and the struggling economy.

"The market can change on a dime," said Robert Pavlik, chief investment officer at Oaktree Asset Management, of the market's ongoing focus on the price of crude.

Up 40 or so points, the Dow Jones Industrial Average nearly doubled its gains after the government reported crude supplies climbed by 800,000 barrels to 301.8 million last week, with the news fueling a sharp drop in the price of crude futures.

The Dow was recently up 72.30 points to 11,879.73, with 23 of its 30 components trading higher, led by the likes of Citigroup Inc. , up 3.7%, Home Depot Inc. , ahead 3.4%, and General Electric Co. , up 3.2%.

A downgrade by Goldman Sachs sent Boeing down over 6%.

Shares of American Express Co. were off 0.5% in the wake of an agreement that has AmEx dropping an antitrust lawsuit against MasterCard Inc. , which gained 5.1%. .

The S&P 500 gained 13.47 points to 1,327.76, and the Nasdaq Composite rose 38.50 points to 2,406.78.

On the New York Mercantile Exchange, crude-oil futures were down $4.03 to stand at $132.97 a barrel.

Fed focus

This afternoon, the Fed is widely expected to hold rates steady after a series of cuts, but the central bank's statement will be scrutinized for clues as to when Fed policymakers might begin hiking the federal funds rate from its current 2%. .

"For the most part, the street expects unchanged results from the meeting, it's going to be the statement that will move the markets later," said Pavlik.

"There is talk the Fed is going to be moving away from recent hawkish comments. I don't see how that can be. The obvious problem is your facing inflation with a slowing economy, so I think that is going to keep a lid on most of trading until after 2 p.m.," said Pavlik.

Ahead of Wall Street's open, the Commerce Department reported that U.S. orders for durable goods were unchanged in May. .

Later data had the Commerce Department estimating sales of new U.S. single-family homes fell 2.5% in May to a seasonally adjusted annual rate of 512,000 as sales in the West fell to a 26-year low. .

Overseas, European stocks rose, with the FTSE 100 up 0.5% in London. .

Overnight, the Nikkei 225 closed 0.1% lower in Tokyo, while Shanghai rallied. .

By Kate Gibson