US STOCKS-Wall St mixed as markets await Fed's rate decision

By Purvi Agarwal and Sukriti Gupta

Sept 17 (Reuters) - Wall Street's main indexes were mixed on Wednesday, with the benchmark S&P 500 largely muted ahead of a widely anticipated interest-rate cut from the U.S. Federal Reserve later in the day.

The central bank is expected to reduce borrowing costs by at least 25 basis points at 2 p.m. ET, a move priced in by investors after a series of economic indicators showed a weakening labor market.

Chair Jerome Powell's speech and "dot plot" projections will be scrutinized to gauge the monetary policy outlook. Investors are pricing in about 66 points of easing by the end of 2025, according to data compiled by LSEG.

"Cutting rates while inflation is still running ahead of their target suggests that they (the Fed) are concerned with the health of the economy and employment backdrop," said Todd Basnight, director of equity research at Aureus Asset Management.

"But, given the narrowness of the market year-to-date, it (rate cut) perhaps allows for a bit more broadening of stock market returns."

Meanwhile, Nvidia NVDA.O fell 3.1%, dragging the Nasdaq, after a report said China's internet regulator had instructed the country's biggest tech companies to stop buying all of the AI leader's chips.

A broader semiconductor .SOX index was set to snap a nine-session winning streak, its longest since September 2017.

Defensive sectors such as consumer staples .SPLRCS and healthcare stocks .SPXHC climbed 1.2% and 0.6%, respectively, and broader gains limited tech-driven declines on the S&P 500.

The financials sector .SPSY bounced back from Tuesday's losses and rose 1%. American Express AXP.N advanced 2.7% to hit a record high and was among the biggest gainers on the Dow.

At 11:50 a.m. ET, the Dow Jones Industrial Average .DJI rose 297.03 points, or 0.65%, to 46,054.28, the S&P 500 .SPX lost 8.29 points, or 0.13%, to 6,598.24, and the Nasdaq Composite .IXIC fell 114.23 points, or 0.51%, to 22,219.73.

The Fed meeting will be a test of Wall Street's recent rally, supported by rate-cut expectations and revived enthusiasm around AI-stock-linked trading. Investors expect a resumption in Fed rate cuts to broaden the rally.

Concerns about the central bank's independence seem to have eased a little, with economic adviser Stephen Miran sworn in as a Fed Governor on Tuesday and an appeals court rejecting U.S. President Donald Trump's attempt to sack Governor Lisa Cook.

The three main indexes have gained so far in September, deemed historically bad for U.S. equities. The S&P 500 has shed 1.5% on average in the month since 2000, data compiled by LSEG showed.

New Fortress Energy NFE.O soared 26.5% after the company reached an agreement to supply liquefied natural gas to the Puerto Rican government.

Workday WDAY.O gained 8%, topping the benchmark index after activist investor Elliott Management said on Tuesday it had built a stake of more than $2 billion in the human resources software provider.

Lyft LYFT.O jumped 13.8% on the news that Alphabet's GOOGL.O Waymo would launch autonomous cab rides in Nashville next year in collaboration with the ride-hailing firm. Rival Uber UBER.N fell 5%, to the bottom of the S&P 500.

Advancing issues outnumbered decliners by a 2.22-to-1 ratio on the NYSE and by a 1.73-to-1 ratio on the Nasdaq.

The S&P 500 posted 14 new 52-week highs and one new low, while the Nasdaq Composite recorded 75 new highs and 26 new lows.