Wall Street falls ahead of Fed; Dow down 1%

Major U.S. stock indexes are down in early trading on Wednesday, with investors cautious ahead of the Federal Reserve's rate decision this afternoon. The Dow .DJI is down more than 1%, with shares of big banks and industrial companies leading the decline.

While many traders expect the Fed to leave rates unchanged, sharply higher oil prices tied to the U.S.-Israeli war on Iran have kept inflation worries high and Fed policymakers have spoken about inflation.

Also, the no-guidance regime adopted by U.S. central bank chief Kevin Warsh, who took over as head of the central bank in May, has meant for some that this afternoon's outcome is unusually uncertain. Warsh has said he has "no tolerance" for inflation that has been running above the Fed's 2% target for more than five years.

The Fed's policy-setting committee is due to announce its decision at 2 p.m. EDT (1800 GMT). Warsh is scheduled to hold a press conference beginning half an hour later.

The S&P 500 industrials index .SPLRCI is down more than 1% and leading declines among S&P 500 sectors.

Adding to negative sentiment, shares of Procter & Gamble PG.N are down about 3% after the consumer staples company forecast slower revenue growth in fiscal 2027 after its quarterly sales fell short of estimates and margins dropped. It cited elevated oil prices as the biggest variable in its guidance.

After the closing bell, all eyes will be on Microsoft MSFT.O and Meta META.O, which are due to report quarterly results. Worries about massive AI spending have kept investors on edge and weighed on tech shares in recent weeks.