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Markets Are Feeling Low as the Clock Ticks on Fed Decision

Mixed news on housing, along with nervous apprehension regarding the outcome of the Federal Open Market Committee meeting, seems to be keeping markets depressed this morning. Both the S&P 500 (SNPINDEX: ^GSPC  ) and the Dow Jones Industrial Average (DJINDICES: ^DJI  ) are seeing red this morning, as jittery investors await the news on the Fed's plan to taper its current monthly bond-buying spree.

Most see tapering as a done deal, and expect little market reaction if that is the Fed's wont. An analyst from Barclays, however, notes on The Wall Street Journal's MoneyBeat that if history repeats itself, things could get ugly. Noting that the market experienced a big sell-off in 2004 when -- not unexpectedly -- the Fed changed monetary policy, Barry Knapp thinks the same could happen this time around.

Adding to the uncertainty, a couple of housing-related news items could be stirring the pot. Reuters reported that the Mortgage Bankers' Association showed mortgage applications up 11.2% since last week, following a drop of 13.5% from the prior week. Mortgage rates fell slightly over the week, as well.

Additionally, the U.S. Census Bureau released its report on new housing, which showed 918,000 building permits filed in August, a reduction from July's adjusted rate of 954,000 and lower than the expected 943,000. Housing starts were a bit higher in August, at 891,000, than July's 883,000 -- but lower than market expectations, which hoped for around 910,000.

As usual, the latest numbers are subject to revision, but the winding down of the FOMC meeting later today will likely give the raw numbers more weight than might otherwise be the case.

Winners, losers
Some stocks have managed to keep their heads above water today, and Microsoft (NASDAQ: MSFT  ) continues to look spiffy following its excellent showing yesterday. The company got an extra little boost today, as ZDNet reported earlier that the Windows Phone 8 has been awarded the FIPS 140-2 security accreditation from the federal government. This is big, and this announcement could mean more contracts with government agencies that require devices that can deliver high levels of security encryption for sensitive data.

In the banking world, JPMorgan Chase (NYSE: JPM  ) is looking pretty downcast, as more legal messiness piles on the big bank regarding its London Whale trading fiasco. With both the FBI and New York City prosecutors rumored to be considering filing criminal charges in that case, investors may be beginning to tire of all the money pouring out of the bank in the form of legal expenses.

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