By Yasin Ebrahim

Investing.com – The S&P 500 was in a holding pattern Wednesday, as investors opted for caution ahead of the Federal Reserve decision due later.

The dropped 0.17% or 20 point, and 0.1% (or 0.80%) was the result.

Widely expected, the Federal Reserve will soon announce that it is increasing its pace in tapering bond purchases. It wants to allow it sufficient time to increase rates amid fears that inflation might persist for longer than predicted.

Stifel wrote in a note, “A quicker end to assets purchases furthermore opens the door to a potentially earlier transition towards Phase 2 policy adjustment, rate rises,”

It is widely believed that the Fed met sooner than expected to price in the taper. Investors will pay attention to the Fed projections regarding the future outlook of the economy and inflation.

Investors continued their avoidance of high-valued sectors such as tech in the face of Fed policy that is less favorable to the market.

Google-parent Alphabet (NASDAQ:), Microsoft (NASDAQ:), Facebook (NASDAQ:), and Apple (NASDAQ:), which combined make up more than fifth of the broader S&P 500 were in the red.

In the wake of increasing concerns over Omicron threats to travel and energy supply, oil prices dropped.

Devon Energy (NYSE:), Occidental Petroleum, (NYSE:), Diamondback Energy fell over 3%.

Further retreat in Tesla (NASDAQ) led to lower consumer discretionary, with the electric vehicle manufacturer losing more than 2 percent intraday.

However, health care was driven higher by an Eli Lilly (NYSE) more than 9 percent jump after the pharmaceutical company upgraded its earnings outlook to 2021 and predicted further strength in 2022.