Tuesday's Market: Fed Hopes vs. Earnings Warnings Yields Split Decision

(Updated from 4:12 p.m. EDT)

Stocks climbed off their lows this afternoon, as the prospect of an interest-rate cut tomorrow eclipsed dreary corporate news.

Ahead of the Federal Reserve's decision on monetary policy tomorrow, the Dow Jones Industrial Average closed down 31.74 points, or 0.3%, to 10,472.48; it was off 107.15 points earlier in the day. The Nasdaq Composite , however, finished up 13.8 points, or 0.7%, to 2064.6; it was behind 33.3 points at one point today. The S&P 500 ended lower by 1.84 points, or 0.15%, to 1216.76.

For most of the day, buyers and sellers were caught in a game of tug-of-war. The buyers were compelled by positive economic reports on durable goods orders , consumer confidence, and home sales, while the sellers were influenced by profit warnings from Merrill Lynch (MER Quote) and Applied Micro Circuits (AMCC Quote). ...