Pre-Fed profit taking

NEW YORK (CNNMoney.com) -- Investors can mull a rash of earnings and merger news as they await clues from the Federal Reserve about the central bank's thinking on the economy and future interest rate moves.

Stock futures were lower in early trading, with the tech-heavy Nasdaq pointing to the biggest declines.

"I don't think the downward direction is being caused by any one piece of news - you have to remember we've had such a big run-up so far," said Art Hogan, chief market analyst at Jefferies. "But I think trading will be relatively neutral until we get the Fed statement this afternoon."

U.S. stocks ended trading Tuesday with a narrow loss, ending a streak of record high closes for the Dow Jones industrial average.

While the Fed is almost universally expected to leave rates unchanged, the investors are waiting for the statement that will be released at 2:15 p.m.

There have been growing signs of a slowing U.S. economy since the central bank's last meeting, and some retreat in inflation pressures. If the Fed stresses those economic readings, it could spark a stock and bond rally on raised hopes of an interest rate cut later this year.

Investors will also weigh a series of earnings reports from late Tuesday and early Wednesday.

Dow component Walt Disney (Charts, Fortune 500) beat earnings estimates in its report Tuesday, but shares fell in after-hours trading after its revenue came in below forecasts. Shares were off nearly 2 percent in premarket trade Wednesday morning.

Tech bellwether Cisco Systems (Charts, Fortune 500) also saw shares fall in after-hours trading despite beating forecasts, as traders were apparently looking for a bigger beat of the estimates. Cisco shares dropped another 5 percent in premarket trade Wednesday morning.

Video game publisher Electronic Arts (Charts) beat forecasts but lowered guidance for earnings going forward.

Toyota Motor (Charts), which became the world's No. 1 automaker in terms of vehicle sales during the quarter, reported a surprise drop in quarterly operating profit and projected nearly flat profits going forward.

In the latest sign of weakness in the U.S. real estate and home building market, luxury builder Toll Brothers (Charts, Fortune 500) released some preliminary results for the quarter ending April 30 and said it expects to post a profit in the period, although it warned it no longer expects to achieve the most recent quarterly and annual guidance it provided in February.

Reports of mergers could also affect trading. Shares of British mining company Rio Tinto (Charts) jumped on talk that Australian rival BHP Billiton (Charts) was preparing a $100 billion-plus hostile bid for the company, even as Rio Tinto denied it had received a takeover offer. Rio Tino shares shot up 6 percent on the news while BHP Billiton gained 2.2 percent in premarket trade.

Also on the merger front, the Wall Street Journal reported that telecom equipment maker Alltel (Charts, Fortune 500) could be the the latest takeover target for private equity firms. Shares gained about 2.7 percent before the opening bell.

In other corporate news, Dow component JP Morgan Chase (Charts, Fortune 500) could be snared in the growing scandal over student loans after a report that Congressional investigators have found the bank made improper payments to college student aid officers.

Markets in Asia closed mostly higher. Major indexes in Europe were mixed in early trading.

Oil prices were little changed in early trading ahead of the 10:30 a.m. ET report on U.S. fuel inventories. U.S. light crude gained 3 cents to $62.29 a barrel in electronic trading.

Treasury prices were slightly lower ahead of the Fed meeting, taking the yield on the 10-year note to 4.64 from the 4.63 percent level reached late Tuesday. The dollar was higher against the yen and the euro ahead of the Fed.