Wary investors keep tabs on Fed

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NEW YORK (CNNMoney)

But it appears investors are unwilling to make big bets until they have more clarity about the Fed's next moves.

The Dow Jones industrial Average, S&P 500 and the Nasdaq edged up slightly in morning trading. Volume should be extremely light this week as the typically sluggish month of August is coming to a close and investors get ready for the upcoming Labor Day holiday.

Still, the possibility of the Fed starting to trim, or taper, the size of its $85 billion a month in asset purchases was the focus of debate this past weekend as central bankers from around the world took part in the Fed's annual monetary policy symposium in Wyoming.

"The Fed seems divided on the subject," said John Toohey, vice president of equity investments at USAA Investments. Some market experts speculate that the Fed may begin to taper at its next monetary policy in mid-Septemeber. Toohey said the market will likely experience increased volatility leading up to that as investors wait in anticipation.

Emerging economies like India, Brazil and Indonesia are especially vulnerable to changes in Fed policy.

The U.S. dollar is already rising versus foreign currencies like the Brazilian real and the Indian rupee, and some investors are pulling their money out of these countries, triggering fears of a panic.

A downbeat report on manufacturing was also limited the gains. Durable goods orders tumbled 7.3% in July, the most in almost a year. The decline was worse than the 5% drop analysts were expecting, and followed three months of strong increases.

What's moving: Shares of Amgen (AMGN, Fortune 500) rose sharply after it agreed to buy Onyx Pharmaceuticals (ONXX) for $10.4 billion, in a deal that will give Amgen access to a wide range of cancer treatment drugs.

Meanwhile, the BATS Global Markets and Direct Edge Holdings exchanges announced that they will merge in a deal that would create that second-largest stock exchange by trading volume. The deal comes just a few days after a major trading glitch that affected Nasdaq OMX (NDAQ). BATS also experienced significant trading problems a year ago, issues that forced the company to cancel its plans to go public.

Related: Fear & Greed Index shows fear

World markets: European markets were lower in morning trading. The London Stock Exchange is closed for a holiday.

Asian markets ended mixed after a relatively calm trading session, with the Shanghai Composite adding 1.9% and the Hang Seng increasing 0.7%. The Nikkei ended in negative territory.

First Published: August 26, 2013: 9:46 AM ET

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