US STOCKS-Wall St eases ahead of Fed, elections

* Investors stand pat ahead of Fed, elections

* 3M cuts outlook, weighs on industrials

* Initial jobless claims fall unexpectedly

* Dow off 0.2 pct, S&P off 0.01 pct, Nasdaq up 0.04 pct
* For up-to-the-minute market news see [STXNEWS/US]
(Updates to midafternoon, changes byline)

By Chuck Mikolajczak

NEW YORK, Oct 28 (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) edged lower on
Thursday as investors took to the sidelines ahead of expected
upheaval from next week’s elections and likely additional
stimulus by the Federal Reserve.

Next week’s events could signal shifts in both monetary
policy and legislative direction, leading investors to be
cautious and largely disregard Thursday’s corporate earnings
and economic reports.

“You’ve certainly got a lot of people now nervous that what
happens when they talk will be disappointing, and they should
be concerned, because I don’t know what (Fed policymakers) are
going to say that is going to save the world,” said Joe
Saluzzi, co-manager of trading at Themis Trading in Chatham,
New Jersey.

A look at exchange-traded funds based on some broad market
indexes and sectors showed premiums for November
out-of-the-money puts outweighed equally spaced call contracts
for most instruments. Overall U.S. put volume rose 21.3 percent
on Wednesday, while the CBOE Volatility Index (.VIX: ) logged its
fourth consecutive session of gains, up 1.8 percent.

Thursday’s session also brought about a breakdown in the
recent inverse correlation between stocks and the dollar, as
stocks slipped and the dollar index (Read more about the global trade. ) (.DXY: ) shed 1.1 percent
against a basket of currencies.

“That correlation hasn’t broken in quite some time. That
could be disturbing a few people,” added Saluzzi.

The Dow Jones industrial average (.DJI: ) dropped 20.36
points, or 0.18 percent, to 11,105.92. The Standard & Poor’s
500 Index (.SPX: ) shed 0.16 points, or 0.01 percent, to
1,182.29. The Nasdaq Composite Index (.IXIC: ) gained 0.93
points, or 0.04 percent, to 2,504.19.

3M slid 6 percent to $84.95 and pulled the Dow lower after
the diversified manufacturer reported quarterly earnings that
just beat expectations, but trimmed its outlook due to costs
from recent acquisitions. For details, see [ID:nN25282000]

New claims for unemployment benefits fell unexpectedly in
the latest week, and this more encouraging reading on the labor
market, along with the weak dollar, gave stocks an early
boost.

However, investors remained cautious about making big bets
ahead of the outcome of the mid-term elections and the Fed’s
announcement. Fed policymakers are set to meet on Tuesday and
Wednesday. [ID:nN28118907] and [ID:nLDE69R17T]

Anticipation of a Fed move has been a driver of recent
market action as investors speculated over the size and time
frame of further stimulus. Equity investors have bet that more
easing will invigorate an economic recovery and lift asset
prices.

Since the beginning of September, the S&P 500 is up 12
percent.

Most leading economists expected the Fed to buy between $80
billion and $100 billion in assets per month under a new
program to bolster the struggling economy, a Reuters poll
found. [ID:nNLLRLE6LL]
(Additional reporting from Doris Frankel; Editing by Jeffrey
Benkoe)

US STOCKS-Wall St eases ahead of Fed, elections