While you were sleeping: Stocks drop after Fed decision

Wall Street gave up some its earlier gains after the US Federal Reserve said it expects the economy will grow at a "moderate pace" and it kept alive the possibility of a rate hike at its December meeting               .

"The impression the Fed left is that December is still on the table, they didn't close the door to that," BlackRock global chief investment strategist Russ Koesterich told Bloomberg.

"You're going to see some change of positions here, the main takeaway is the Fed is managing its optionality and if we get a few good economic data points then December is possible."

In New York trading at about 2:19pm, the Dow Jones industrial average eked out a 0.01% gain, while the Standard & Poor's 500 Index and the Nasdaq Composite Index each traded 0.3% higher.

An hour earlier, the Dow was up 0.5%, while the S&P 500 was 0.6% stronger, and the Nasdaq had traded 0.7% higher.

"The committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labour market indicators continuing to move toward levels the committee judges consistent with its dual mandate," the Fed said in a statement at the end of its scheduled two-day meeting.

"The committee continues to see the risks to the outlook for economic activity and the labour market as nearly balanced but is monitoring global economic and financial developments," it noted.

Few had expected the Fed to hike rates during this meeting. Last week the People's Bank of China cut rates, while the European Central Bank pledged its readiness to add fresh stimulus.

"Labour market indicators, on balance, show that underutilisation of labour resources has diminished since early this year," the Fed noted. "Inflation has continued to run below the Committee's longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports."

Meanwhile, a Commerce Department report showed the US merchandise trade deficit dropped to $US58.6 billion in September, the narrowest in seven months, down from $US67.2 billion in August. The data prompted some analysts to lift their forecast for GDP growth, due for release on Thursday.

In the Dow, gains in shares of Apple and those of Merck, last up 2.8% and 2.3% respectively, offset slides in shares of Boeing and those of Procter & Gamble, down 2.1% and 2% respectively.

Shares of Apple rose, after the company reported quarterly results that surpassed expectations on record iPhone sales, offering optimism that it can sustain its tremendous rate of growth.

"Fiscal 2015 was Apple's most successful year ever," Apple chief executive Tim Cook says.

"We are heading into the holidays with our strongest product line-up yet, including iPhone 6s and iPhone 6s Plus, Apple Watch with an expanded line-up of cases and bands, the new iPad Pro and the all-new Apple TV which begins shipping this week."

Even in China, where the central bank just last week cut interest rates again to help stoke the pace of economic growth, Apple sales shows no signs of slowing.

"If the Chinese consumer is pulling back on spending then it seems to be either at the very high luxury end or maybe on some of the everyday non-essential items," Atlantic Equities analyst James Cordwell told Reuters.

"I think the smartphone is increasingly viewed as an essential in China. So, I don't see the economy weighing significantly on Apple growth over the next few quarters."

On the flipside, shares of Twitter slid, last down 1.8%, after the company offered a disappointing outlook on sales growth.

In Europe, the Stoxx 600 Index finished the session with a 1.1% gain from the previous close. The index has risen 8.1% in October, putting it on track for its best monthly gain since 2009.

France's CAC 40 Index increased 0.9%, the UK's FTSE 100 Index advanced 1.1%, while Germany's DAX Index moved 1.3% higher.

(BusinessDesk)