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The equity market is moving higher this morning, though it's confined to a tight trading range in anticipation of the outcome of the

Federal Reserve's policy meeting, now under way in Washington. Results will be announced at about 2:15 p.m. EST.

Lately, the market's gotten its hopes up that the Fed might be more aggressive in recognizing an economic slowing, thanks to a

Wall Street Journal

article yesterday suggesting the Fed may officially lean toward cutting the 6.50%

fed funds rate. Many investors feel that a more accommodative stance from the Federal Reserve would alleviate some of the pressure on stocks.

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This quarter and the previous quarter have been marked by earnings warnings and outright misses on earnings estimates by companies. The market's harsh reaction to the deteriorating picture has investors clamoring for some relief from the Fed, which aggressively raised rates in the last year and a half to curb speculation and stave off inflation.


Morgan Stanley Dean Witter


missed earnings projections. The brokerage

fell short of expectations based on declining trading and investment banking revenue and losses in

high yield bonds. Credit has tightened since 1998, when the Fed cut rates three times, and banks have investments on their books that haven't panned out. The stock, however, was higher, up 4.3%.

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On the other hand,

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TheStreet Recommends

Goldman Sachs


handily beat Wall Street expectations with $1.50 a share, excluding certain items, for its fiscal fourth quarter. Analysts had been forecasting $1.38 per share. Goldman was rising 6.5%; the

Amex Broker/Dealer Index

was gaining 2.2%.

Elsewhere on the earnings front,

SBC Communications


, for example, reaffirmed its forecast for fourth-quarter earnings per share of 56 cents to 58 cents, but that's at the low end of expectations.

Merrill Lynch

cut its rating on the company today, and the stock was lately down 13.4% to $46.25.



, a provider of electronics manufacturing and supply-chain management services, posted

stronger-than-expected results for the quarter ended Dec. 1, thanks to strong demand for networking and telecommunications products. Solectron was lately up 14.3% to $30.55.


Wall Street Journal

, citing insiders at the Fed, said the policy-making body is considering taking a more aggressive stance on the economy; and could even cut interest rates as early as today. However, that seems unlikely; as a Reuters poll published yesterday shows all 26 primary dealers of government securities believe no change in rates will be made and just three feel the Fed will shift to a directive suggesting rate cuts are imminent.

Currently, the Fed has a tightening bias -- which that holds the risks of inflation exceed those of recession and indicates a predilection towards raising interest rates. The odds of a rate cut coming today in the fed funds rate, implied by the prices of

fed funds futures contracts, rose to 46% yesterday from 41% on Friday.

And always-in-the-news



is planning to cut costs and simultaneously boost some salaries to ensure that valued talent doesn't leave. That's according to a memo circulated last week by Mr. Softie CEO Steve Ballmer. Microsoft, which was pummeled Friday and yesterday after issuing its first

earnings warning in more than a decade, was trading down 88 cents to $46.94 this morning.

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Sector Watch

Major technology indices are stronger today. The

Philadelphia Stock Exchange Semiconductor Index

was lately up 4%; the

Nasdaq Telecommunications Index

was gaining 0.8%, and the

Philadelphia Stock Exchange Computer Box Maker Index

was rising 0.99%.

After getting pummeled yesterday, the networking stocks are holding their own today. Analysts at

Thomas Weisel Partners

are expected to release a report suggesting that networking spending will grow just 2.6% next year -- that hurt those stocks yesterday.



, which was smashed, was lately up 3.6% to $44.50.

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Treasury prices were sinking this morning ahead of the Fed meeting. The benchmark 10-year

Treasury note was lately down 13/32 at 103 29/32, yielding 5.229%. Treasury prices rose yesterday on expectations that the Fed will modify its stance on the economy.

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