Stocks open lower

NEW YORK (CNNMoney.com) -- Stocks opened lower Wednesday morning as the Federal Reserve resumed its policy meeting and IBM is reportedly in talks to buy Sun Microsystems for at least $6.5 billion.

Also in focus: a congressional hearing on bailed-out insurer American International Group and a larger-than-expected rise in consumer prices.

The Dow Jones industrial average (INDU) was down 70 points, or 0.9%, shortly after the opening bell. The S&P 500 (SPX) index slid 0.8% while the Nasdaq composite (COMP) lost 0.7%.

On Tuesday, stocks rallied after the government issued a much stronger-than-expected report on housing starts and building permits in February. It was the fifth gain in six sessions for the major indexes.

But the market could have trouble extending Tuesday's gains, according to Ken Wattret, economist with BNP Paribas in London.

"The sense we've had is that maybe the scale of the rally has gone a bit farther than the fundamentals suggest," said Wattret. "So we're a little worried that the rally has run out of stream."

Economy: The Federal Reserve wraps up its two-day policy meeting, with a statement expected around 2:15 p.m. ET. The central bank is expected to hold the fed funds rate, its key short-term interest rate, at zero.

But the bank might declare that it will start buying long-term U.S. Treasurys, having said at its last few meetings that it was prepared to do so.

Before the open, the government announced an increase in consumer prices for February that was slightly higher than expected.

The Bureau of Labor Statistics said the Consumer Price Index rose a seasonally adjusted 0.4% in February. The core CPI, excluding volatile food and energy prices, rose 0.2%.

A consensus of economists surveyed by Briefing.com had forecast an overall increase of 0.3%, with core CPI up 0.1%. In January, CPI was up 0.3% and the core prices were 0.1% higher.

IBM-Sun: IBM (IBM, Fortune 500) is in talks to buy Sun Microsystems (JAVA, Fortune 500) for at least $6.5 billion, The Wall Street Journal reported. The deal could bolster IBM's computer server products against rivals such as Hewlett-Packard (HPQ, Fortune 500).

AIG: A House Financial Services subcommittee hears Wednesday about the $170 billion government bailout of AIG (AIG, Fortune 500). Among the witnesses will be CEO Edward Liddy, who will face scrutiny on the controversial $165 million paid in bonuses to some of the employees whose actions led to the bailout. (full story)

Global markets: Asian markets closed higher Wednesday, with Tokyo's Nikkei index up 0.3%. European stocks slumped in midday trading.

Oil prices fell 50 cents to $48.66 a barrel ahead of the government's weekly inventory report, after reaching a three-month high on Tuesday.

The dollar slipped versus the euro and the yen, but rose against the British pound.