The Dow Jones Industrial Average (DJINDICES:^DJI) is down slightly as the market eagerly awaits the 2 p.m. EDT release of the Federal Reserve Open Market Committee's statement, followed by the 2:30 p.m. EDT press conference with Fed Chairman Ben Bernanke. As of 1:15 p.m. EDT the Dow is down 21 points, or 0.13%, to 15,298. The S&P 500 (SNPINDEX:^GSPC) is down 0.14% to 1,649.
There were no U.S. economic releases today, so the market is focused solely on the Fed's statement. To review, as part of its quantitative-easing program, the Federal Reserve is purchasing $85 billion worth of long-term assets each month -- $45 billion in long-term Treasuries and $40 billion in mortgage-backed securities. This is an effort to keep rates down and the economy chugging along.
Investors have begun to worry about when and how the Fed will wind down its quantitative-easing program. Bernanke has made a big effort to communicate the Fed's thinking so as to not to surprise investors. In its previous statements, the Federal Reserve has said it will keep the purchases going until unemployment falls to 6.5%, inflation rises past the Fed's target range of 2% to 2.5%, or long-term inflation expectations take off.
Right now we're not close to any of the Fed's targets, with unemployment at 7.6%, inflation below 2%, and long-term inflation expectations at 2% (as per the TIPS Spread -- the difference between the yields on Treasury Inflation Protection Securities and the nominal U.S. Treasury bond yield). Still, investors are worried. While the Dow has not really reflected it, the bond markets have fallen since May: 10-year Treasury yields have risen from 1.6% to roughly 2.2% now.
So what will the Fed say, and how will the markets react? I don't know, and anyone who claims to know is lying. You can make educated guesses, but they're just that -- guesses. While thousands of people closely monitor the Fed and all its members, surprises are bound to happen. However, as the Fed has been clear on its stance so far, your investment strategy should not be predicated upon small changes in the Fed's statements. If it is, your outlook is too short-term for successful investing.
Despite the uncertainty surrounding the upcoming Fed statement, some Dow stocks are making decent gains. Among today's leading Dow stocks is Hewlett-Packard (NYSE:HPQ), up 0.9%. Earlier today, HP hit a new 52-week high of $25.87. The company has been on a tear this year, up 81% year to date as it continues its slow turnaround under the guidance of CEO Meg Whitman. Signs of this were seen yesterday when HP announced that it would replace the head of its printing and PC business with Dion Weisler, who was hired last year from Lenovo. The PC business has been struggling this year; in the first quarter, worldwide PC sales saw their worst drop in history, down 14%.
And leading the Dow this afternoon is Coca-Cola (NYSE:KO), up 1%. This morning Credit Suisse analysts initiated coverage on Coca-Cola, saying the company has "the potential to generate returns in excess of the peer group over the next two to three years." The ratings agency continued, "We see upside to 2013/14 EPS estimates based on optionality in key markets in Asia and the U.S., and we also expect margins and ROIC to improve."
Speaking of Asia, today Coca-Cola announced a reshuffling of its management for its Pacific operations. The current chief executive for India and Southwest Asia, Atul Singh, will become deputy president for the Pacific. Coke has been focused on growing its business in emerging markets, especially India and China. Investors can take comfort in Coke's business model, knowing that no matter what the Fed announces, people around the world will continue to drink Coke for decades to come.
Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.