Stocks are going to play this one by ear.

The

Federal Open Market Committee

is convening in Washington to determine the fate of short-term interest rates. And while it's true that the laws of physics don't absolutely preclude the unexpected -- a 50-basis-point tightening, for example -- the feeling on Wall Street is that the outcome of today's Fed meeting couldn't have been more clearly telegraphed. Sometime around 2:15 p.m. EST, the FOMC will raise interest rates by the usual 25 basis points and issue a statement to the effect that inflation remains a concern going forward.

That much is, as they say, priced into the market.

No one's really sure what that means, of course. Neither traders nor analysts would claim that stocks' current valuations are discounting the precise braking effect that today's tightening will have on the future earnings of companies. They might note that even after last week's rally, the

S&P 500

has struggled since the tightening cycle began last June. But it's really a matter of psychology. When Wall Street imagines the market's midyear landscape, they see a

fed funds rate

of at least 6.25%, 50 basis points higher than it is right now.

One can only assume that valuations are behaving accordingly.

"I agree with that," said Doug Myers, vice president of equity trading at

IJL Wachovia

in Atlanta. "Everything's (priced) in it already; all the numbers and all the posturing."

Stock futures weren't telling any directional tales. At 9:05 a.m. EST, the

S&P 500 futures

were down 2, near fair value. That doesn't indicate much of a trend for the day ahead.

"People are going to take a wait-and-see approach," said Myers. "There's just no urgency right now that I'm seeing."

Meanwhile, even after yesterday's huge selloff, the opening indication for the large technology stocks looks dicey, with the

Nasdaq 100

futures down 12.5 to 4340.

The bond market was edging higher, with the 10-year note up 7/32 to 102 15/32 and yielding 6.162%. The 30-year Treasury was up 16/32 to 103 29/32, sending its yield below the 6% level, to 5.968%. The bonds had little reaction to news that the U.S. trade deficit widened to a record $28 billion in January from a revised $24.6 billion the month before.

The large European indices were selling off in afternoon trade, paced by the Paris

CAC

, which was off 45.76, or 0.7%, to 6306.75. Frankfurt's

Xetra Dax

was down 88.42, or 1.1%, to 7783.96 despite a stronger-than-expected

Ifo

survey of German business confidence. London's

FTSE

was off 52.5, or 0.8%, to 6572.0.

The euro was trading at $0.9701.

Asian markets were mixed overnight.

In Tokyo, investors came back from a three-day weekend cautiously, sending the

Nikkei

36.04 points higher to 19,602.36.

The dollar rose to 106.41 yen in Tokyo trading. The yen's weakness came despite news that Japan's

All-Industries

index, a widely watched indicator of economic activity, rose 0.5% in January, after a 0.4% rise in December.

The greenback was lately trading at 106.69 yen.

In Hong Kong, the

Hang Seng

dropped 34.48 to 17,199.98 in a tepid pre-FOMC session. Hong Kong's interest rates track those in the U.S.

Taiwan's

TWSE

index soared 468.43, or 5.5%, to 9004.48, as retail investors hopped back into the market that has steadily declined for weeks. But government buying had much to do with those gains, accounting for roughly 40% of the demand for stocks today, according to traders.

For a look at stocks in the preopen news, see Stocks to Watch, published separately.