Credit Business

By Angela Moon

NEW YORK (Reuters) - Stocks were little changed on Wednesday as the market cautiously awaited Federal Reserve's last policy announcement of the year which might determine the immediate future of its current program to stimulate the economy.

The Federal Open Market Committee will release a statement at 2 p.m. (1900 GMT). Fed Chairman Ben Bernanke will follow the announcement with his final news conference at the helm of the U.S. central bank about 2:30 p.m.

Many expect the Fed to continue its quantitative easing program at the current pace of $85 billion monthly asset purchases into next year. But stronger economic data recently has led some to believe now is the time to begin to take off the training wheels of the recovering economy and allow it gradually to grow on its own.

"We expect tapering in the first quarter of next year. Today's announcement will be whether they will signal that today or wait until Janet Yellen" becomes Fed chief, said Jim Russell, senior equity strategist at U.S. Bank Wealth Management.

The CBOE Volatility index VIX <.VIX>, which usually moves inversely to the S&P 500 index, was down 0.3 percent at 16.71, after falling nearly 3 percent earlier. The index gained more than 14 percent last week as investors speculated when the Fed would start tapering its stimulus.

"There is a lot of protection built into the market already. Now people are asking, what if the Fed says exactly what is expected? The fear (of immediate taper) is dissipating and trades are adjusting their positions (in VIX)," said J.J. Kinahan, chief strategist at TD Ameritrade.

A survey of fund managers by Bank of America Merrill Lynch released on Tuesday revealed that only 11 percent of those polled expect a taper this week.

The Dow Jones industrial average <.DJI> rose 28.7 points or 0.18 percent, to 15,903.96, the S&P 500 <.SPX> lost 1.06 points or 0.06 percent, to 1,779.94 and the Nasdaq Composite <.IXIC> dropped 17.088 points or 0.42 percent, to 4,006.592.

Data on Wednesday showed U.S. housing starts surged to the highest in nearly six years in November, a sign of strength in the housing market that could support a Fed decision to soon start cutting back its bond purchases. The stimulus has kept a lid on borrowing costs and flooded markets with liquidity, boosting an equities rally. The S&P 500 <.SPX> closed at a record high on December 9.

In company news, shares of Lennar Corp rose 2.9 percent to $36.21 after the No. 3 U.S. homebuilder reported a 32 percent jump in fourth-quarter profit.

Apple and Micron weighed on the Nasdaq, with the iPhone maker down 2.1 percent at $543.24 and Micron off 7.6 percent at $21.18.

Ford shares fell 6.8 percent to $15.57 after the carmaker said it expects North American pre-tax profit to be lower in 2014 than in 2013.

CVS Caremark said it expects sales and earnings to rise in 2014 even though it anticipated only a "modest" benefit next year from the launch of the Affordable Care Act, or Obamacare. Its shares rose 2.8 percent to $68.68.

Jabil Circuit shares tumbled 21.5 percent to $15.49 a day after the contract electronics maker said it would sell its warranty repair business and forecast current-quarter results way below Wall Street estimates.

(Reporting by Angela Moon; Editing by Kenneth Barry and Nick Zieminski)