NEW YORK (CNNMoney.com) -- U.S. stocks traded in a tight range Wednesday, as investors remained cautious ahead of the Federal Reserve announcement due later in the day.
Investors still had a bit to chew on in the early going: A widely-expected Republican victory in the midterm election and upbeat economic data.
The Dow Jones industrial average added 14 points, or 0.1%, and the S&P 500 gained 1 point, or 0.a%. The tech-heavy Nasdaq lost 3 points, or 0.1%.
As expected, the midterm elections resulted in big gains for the Republican party, which won control of the House by capturing at least 60 seats.
"We got what we thought we were going to get," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. "We're not going to see much of a [market] reaction because this was priced in to happen as it did."
The shifting balance of power on Capitol Hill is largely seen as a positive for Wall Street, since Republican lawmakers are viewed as more business friendly and fiscally conservative than their Democratic rivals.
Traders will be paying close attention to President Obama's remarks Wednesday afternoon for hints as to how he will navigate the new political landscape.
"Investors want the president to suggest that he is ready to change course," said Kenny Landgraf, pricipal and founder at Kenjol Capital Management. "They need to know that the president undestands the message the American people have sent."
Stocks closed higher Tuesday after interest rate hikes from the central banks of Australia and India sparked an early rally.
What will the Fed say? Though one of the week's major events is out of the way, the markets are still waiting for clarity from the Federal Reserve, which will conclude a two-day policy meeting later Wednesday.
The central bank is expected to announce another round of asset purchases when it releases a policy statement at around 2:15 p.m. ET.
"We'll tread water until the Fed announcement and the fireworks will begin at 2:15," said Donald Selkin, chief market strategist at National Securities, of the muted reaction on Wall Street.
The Fed policy, known as quantitative easing, is designed to put downward pressure on interest rates and pump money into the economy. It is also seen as a way for the Fed to combat deflation, a debilitating cycle of falling prices and demand.
While the details of the asset purchases remain unknown, many market participants expect the Fed to buy a total of $500 billion worth of Treasuries in $100 billion monthly increments.
The S&P has risen 12% since late August on expectations of another round of stimulus from the Federal Reserve, but stocks have been moving sideways recently as investors awaited the outcome of the election and confirmation from the Fed.
Some analysts warned that the market could be poised for a pullback if these two issues play out as expected.
"It's already anticipated," Selkin said. "The market wanted this result and they got it, now they need something for an encore."
World markets: European stocks were up in the afternoon on news of the election results and in anticipation of the Fed move. Britain's FTSE 100 and the DAX in Germany added 0.2%, and France's CAC 40 added 0.5%.
Asian markets ended mostly higher. The Hang Seng in Hong Kong gained 2% after Hong Kong launched a gold exchange-traded fund backed by physical gold held in vaults within Hong Kong. Tokyo's Nikkei was up about 0.1% and the Shanghai Composite Index lost 0.5%.
Currencies and commodities: The dollar eased against the euro and the British pound ahead of the Fed announcement which could further weaken the greenback. It was up against the Japanese yen.
Oil for December delivery gained $1.00, or 1.2%, to $84.90 a barrel.
Gold futures for December delivery slipped $2.40 to $1,354.50 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 2.54% from 2.59% late Tuesday.
Economy: In addition to the Fed announcement, investors also took in economic reports on the job market, activity in the services sector and factory orders.
A report from Automatic Data Processing, which manages payrolls for 500,000 companies, showed that private-sector employers added 43,000 jobs in October, rebounding from a modest decline in the prior month.
In a separate report, employers announced 37,986 job cuts last month, up 2.2% from September, according to outplacement firm Challenger, Gray & Christmas. But the October number was still well below the year-ago level.
The Institute for Supply Management's services index jumped to 54.3 in October, from 53.2 the previous month. Analysts were expecting the service sector to expand at a more modest pace, with the index rising to 53.4.
A government report showed that factory orders improved 2.1% in September. Analysts were expecting order to tick up 1.7%.
Companies: CNNMoney's parent company, Time Warner reported earnings of $1.4 billion and raised its outlook for 2010. Shares of Time Warner slipped 1.9%.
AOL reported a decline in revenue for the third quarter that exceeded analysts' expectations. The stock gained 5.8%.
CVS Caremark said third-quarter earnings and revenue fell, but the results were in line with expectations. CVS shares rose 1.1%.
Qwest Communications posted a loss but beat expectations sending shares up 0.2%.
Garmin missed estimates thanks to slow sales and cut its forecast for the year. Shares sank 6.5%, and was the biggest loser on the Nasdaq.
Health insurer WellPoint posted a third-quarter profit that beat expectations and raised its outlook for the year. Shares of WellPoint were down 0.7%.
Hartford Financial Services returned to profit during the third quarter from a year-ago loss, and raised its outlook for the remainer of the year. The stock jumped 6.4% and was the biggest gainer on the S&P 500.
Toyota, Ford and General Motors are among the automakers scheduled to report October sales figures throughout the day. Shares of Toyota and Ford posted gains.
After the close, News Corp is expected to post results. The stock rose 0.5%.
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