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U.S. market anxiously waits for Fed's meeting next week

NEW YORK -- After weeks of speculation and anxiety over the future of short-term interest rates, the U.S. market will finally get its questions answered as the Federal Reserve's open market committee meeting convenes next week. The direction of stocks, however, will hinge on the outcome of the meeting and particularly the Fed's rhetoric, analysts say.

"The meeting will take away the suspense and stocks will hopefully rally after that, but until then we're going to drift," said Don Selkin, chief market strategist at Joseph Gunnar.Selkin said the market will continue to trade cautiously on very light volume: "Why make a big commitment until we've seen what happens?"

But some analysts said even though stocks and bonds have been depressed of late, the meeting will not necessarily provide the catalyst to lift the market higher.

"We've seen negative money flows in a wide variety of sectors and we may see some further slippage," said A.C. Moore, market strategist at Dunvegan & Associates.

Analysts and economists say an increase of 25 basis points is pretty much a done deal given Greenspan's previous remarks about moderate pre-emptive action to slow growth and curb inflation.

While this rate hike has already been discounted by the markets, some analysts say the Fed's rhetoric will be crucial in determining where stocks are headed.