NEW YORK (CNNMoney)
The Fed is wrapping up its final policy meeting of the year and investors are split over whether the central bank will announce plans to scale back, or taper, its $85 billion per day bond buying program.
The Dow Jones industrial average, the S&P 500 and the Nasdaq were all higher in early trading. The bond market was in a holding pattern. The yield on the 10-year note was little changed at 2.87%.
This could be a very volatile day for the markets as investors wait for the Fed's announcement at 2 p.m. ET and press conference featuring Fed chair Ben Bernanke at 2:30.
The Fed has been buying bonds since 2008 and many investors say the liquidity boost has been the main driver of the bull market in stocks since 2009.
But as the economy improves, the Fed has been preparing the market for a gradual reduction in the program, known as quantitative easing. Bernanke sent shock waves through global markets in May when he first raised the prospect of tapering.
There's little consensus on when the Fed will begin tapering, although most agree that it will happen sooner rather than later. Some are expecting the rollback to begin this year, while others are convinced it will be pushed out to 2014.
Pimco chief executive Mohamed El-Erian told Bloomberg TV on Tuesday that there's a 60% chance the Fed will announce tapering Wednesday. But others say the Fed will wait until after Bernanke's term ends next year and that it will be up to Bernanke's successor, current Fed vice chair Janet Yellen, to announce any major change in policy.
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In any event, investors have had plenty of time to get used to the idea and some believe the market is well prepared for tapering.
David Lutz, a market strategist at Stifel Nicolaus, said stocks could move higher after the Fed meeting in a classic "buy the news" move. "I continue to argue that this is the most telegraphed move in the Fed's history, so most positioning is already built in," he said.
In economic news, the number of new homes breaking ground soared nearly 23% in November from the month prior, the Commerce Department said. But applications for building permits, a leading indicator for new home construction, fell 3% in the month.
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What's moving. Ford (F, Fortune 500) shares fell after the automaker said it expects profits in North America to be lower next year as it rolls out new models in the United States. General Motors (GM, Fortune 500) shares were also lower.
General Mills (GIS, Fortune 500) shares were slightly lower after reporting earnings that missed forecasts, and FedEx (FDX, Fortune 500) shares also dipped after delivering an earnings update. Oracle (ORCL, Fortune 500) is set to report results after the market close.
Shares of movie theater chain AMC rose nearly 9% in early trading after the company raised $331 million from its initial public offering late Tuesday.
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In world markets, European stocks were on an upward march on Wednesday. Asian markets ended mixed. 
First Published: December 18, 2013: 9:47 AM ET
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