By Sue Chang and Mark DeCambre, MarketWatch

All eyes on Fed Chairman Jerome Powell

U.S. stocks struggled for direction Wednesday as investors awaited a key decision by the Federal Reserve that could determine whether Wall Street is likely to get a highly anticipated interest rate cut this year.

How are benchmarks faring?

The Dow Jones Industrial Average rose 22 points to 26,487 while the S&P 500 index slid less than a point to 2,917 and the Nasdaq Composite Index fell 2 points to 7,951.

The Dow and the S&P 500 are both about 1% off their record highs.

What's driving the market?

The Fed is expected to discuss if and when to lower the benchmark interest rates, which stand at a range between 2.25% and 2.50%, to combat the impact of a protracted clash between the Trump administration and China over tariffs, as well as signs of sluggish economic growth creeping into the U.S. economy.

Read:5 things to watch in the pivotal Fed meeting (http://www.marketwatch.com/story/five-things-to-watch-in-the-pivotal-fed-meeting-2019-06-15)

Investors expectations for a rate cut have risen sharply, while the White House has also put pressure on the independent central bank to ease policy. Trump, who has been a constant critic of the Powell & Co., on Tuesday said "let's see what he does" in response to a question about a report indicating that the White House sought to somehow demote the Fed chairman (http://www.marketwatch.com/story/white-house-explored-legality-of-demoting-powell-from-chairman-report-says-2019-06-18) that Trump himself appointed.

Trump has repeatedly called on Powell to cut the central bank's federal-funds rate. The decision is set for 2 p.m. Eastern Time, with the Fed chairman slated to hold a news conference soon after to discuss policy and Fed officials' projections for interest rates.

Still, some strategists argue that the U.S. economy hasn't weakened enough to merit a cut to borrowing costs just yet.

See:The Fed may break a lot of stock-market investors' hearts this week (http://www.marketwatch.com/story/the-fed-may-break-a-lot-of-stock-market-investors-hearts-next-week-2019-06-15)

On Tuesday, the market was sent sharply higher after Trump said over Twitter (https://twitter.com/realDonaldTrump/status/1140977371421564928) that there will be an "extended meeting" with President Xi Jinping of China (http://www.marketwatch.com/story/trump-announces-extended-meeting-with-xi-at-the-g-20-2019-06-18) at the Group of 20 meeting in Japan.

Separately, markets also watched reports that the White House could impose sanctions on Turkey to punish the country from purchasing a missile-defense system from Russia, news that has sent the lira sliding against the U.S. dollar.

Read:'Currency war' fears rise as Trump slams Draghi's hint at more ECB stimulus (http://www.marketwatch.com/story/currency-war-fears-rise-as-trump-slams-draghis-hint-at-more-ecb-stimulus-2019-06-18)

What are strategists saying?

Kevin Giddis, head of fixed-income capital markets at Raymond James, said this month's Federal Open Market Committee meeting is the most important in recent memory, due in part to open criticism of Powell by Trump.

"If we are able to concentrate solely on the meeting, look for the Fed to make some real changes in both their language and leanings. Look for the word 'patience' to go bye-bye. I believe that the FOMC will be unanimous in their belief that due to continued low inflation, the committee will need to look at monetary policy in a different way. No longer will say they that inflation is 'just around the corner' or that price pressures are on the horizon," said Giddis in a note.

He also urged investors to focus on facts during "this wild and crazy reality show."

"In spite of record employment, record equity values, and record corporate profits, the Fed has not yet figured out how to raise prices. Today they will likely acknowledge that and indicate that they will need to make some changes in order to keep from falling behind even more," he said.

"We reiterate: the Fed will open the window for a future rate cut with out taking action today. In fact, we think the pressure from Trump is one of the reason for the Fed to stay on hold which would likely solidify the upward trend," wrote Peter Cardillo, chief market strategist at Spartan Capital Securities in a research note.

Which stocks are in focus?

Shares of CBS Corp. (CBS) rose 0.9% after The Wall Street Journal reported that the media giant is preparing an offer (http://www.marketwatch.com/story/cbs-said-to-be-planning-bid-to-buy-viacom-in-the-coming-weeks-2019-06-18) to buy Viacom Inc. (VIA). Shares of Viacom were up 2.3%.

Harley-Davison Inc.'s stock (HOG) edged 0.4% higher after the motorbike maker said it was teaming up with a manufacturer in China to make its smallest bike in decades.

TripAdvisor Inc. shares (TRIP) were up 1.8% after SunTrust Robinson Humphrey analyst Naved Khan upgraded the stock to buy from hold (http://www.marketwatch.com/story/tripadvisor-stock-rises-after-suntrust-upgrades-to-buy-2019-06-19).

U.S. Steel Corp. shares (X) climbed 3.8% after the company said it would cut production by idling two blast furnaces in response to falling demand for steel from a weakening manufacturing sector related to trade clashes.

Barnes & Noble Inc. shares (BKS) fell 0.5% after the book retailer reported a fiscal fourth-quarter net loss of $18.7 million, or 26 cents per share, after a loss of $21.1 million, or 29 cents per share last year.

Shares of Southwest Airlines Co. (LUV) slid 0.5% after the air carrier raised its second-quarter unit revenue guidance (http://www.marketwatch.com/story/southwest-raises-rasm-guidance-extends-expected-timeline-for-737-max-8-grounding-2019-06-19)while extending the length of time it expects its 737 Max 8 aircraft will be grounded.

How are other assets trading?

Hong Kong's Hang Seng Index rose 2.6% and China's Shanghai Composite Index gained 1%. Japan's Nikkei 225 jumped 1.7%, while in Europe, the Stoxx Europe 600 traded flat a day after European Central Bank Mario Draghi said that some stimulus for the eurozone economy may be merited to combat sluggish inflation and trade-war effects.

In the debt market, the 10-year Treasury note yielded 2.08%, coming off a 21-month low.

West Texas Intermediate crude futures were weaker, while gold futures retreated after settling on Tuesday at a 14-month high. The U.S. dollar weakened slightly, with the ICE U.S. Dollar index falling 0.2%.

(END) Dow Jones Newswires

June 19, 2019 12:31 ET (16:31 GMT)

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