The

Dow Jones Industrial Average was bouncing ahead of the hardly anticipated interest rate announcement due around 2:10 p.m. EDT from the

Fed's

Federal Open Market Committee.

The market usually holds its breath before such an announcement, but not during this pre-election period when few expect the Fed to raise rates. Alfred Goldman, chief market strategist at

A.G. Edwards

, said the market is paying almost no attention to the meeting, and won't unless the FOMC announces that it is going to a neutral bias, meaning the Fed sees the risk balanced between inflation and sub-par growth. Goldman said that would be unlikely at this stage of the game.

In a

separate story,

TheStreet.com

wrote a preview of the Fed meeting.

Meanwhile, the

Nasdaq Composite Index was gaining a bit, after closing yesterday near levels not seen since late May. Yesterday, some 189 Nasdaq stocks hit new 52-week lows.

Some positive comments on tech stocks and on third- and fourth-quarter corporate profits from

Goldman Sachs

talking head Abby Joseph Cohen were doing their part to help out the muted uptick.

In the past, comments from Cohen have sparked substantial movement in stocks. Now, some say Cohen's repetitiveness on tech stocks has lost weight among traders and investors. Goldman of A.G. Edwards said that "in a market that's been in the doghouse for five weeks, investors have become more jaundiced to announcements like these."

Goldman did say, however, that his firm agrees with Cohen, and that tech stocks are the most dynamic area of the market right now. "It really is just the best time to buy stocks," he said. "If the market can develop some cumulative buying, we see averages do well and a good, strong breadth at the close, we can declare victory. It will say the correction is officially dead."

A report earlier today from the

Semiconductor Industry Association

that revealed record global chip sales in August, initially gave substantial power to semiconductor stocks today. But this strength was lately waning. A closer reading of the report reveals that while sales were up in dollar terms, total units sold fell. In other words, record sales may be wholly attributable to the strong dollar, while a drop in units would confirm worries of a slowdown in chip demand.

Concern over a slowdown in chip demand was exacerbated last month after

Intel

(INTC) - Get Report

warned of

slowing growth. The warning bulldozed Intel's share price and sharply pressured prices elsewhere in the semiconductor sector -- and throughout tech. Intel blamed weak European demand for its microchips.

Intel and

Advanced Micro Devices

(AMD) - Get Report

were lately up 2.2% and 2.4%.

Still, the

Philadelphia Stock Exchange Semiconductor

index was lately up only 0.3%.

Xerox

(XRX) - Get Report

, off 26.1%, was the

NYSE's most active stock after reporting after the close yesterday that it expects to see a third-quarter loss rather than a profit. The copier and printer manufacturer attributed the shortfall to weaker-than-expected sales in North America and Europe and heavy competition in all businesses. The

company reported that it anticipates a loss of 15 cents to 20 cents a share, compared with the analyst forecast of a 12 cent profit. Back in July, the company had warned of weakness in its second half. At that time, Wall Street lowered its consensus earnings estimate.

Corel

(CORL)

, meanwhile, was one of the Nasdaq's most active stocks on news that

Microsoft

(MSFT) - Get Report

will take a 24.6% stake in the company. Corel was lately up a whopping 66.1%.

Market Internals

Breadth was positive on the Big Board, but negative on the Comp.

New York Stock Exchange: 1,474 advancers, 1,265 decliners, 624 million shares. 94 new 52-week highs, 54 new lows.

Nasdaq Stock Market: 1,696 advancers, 2,078 decliners, 1.1 billion shares. 40 new highs, 165 new lows.

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Most Active Stocks

NYSE Most Actives

  • Xerox: 24 million shares.
  • Liberty Media (LMG.A) : 13.7 million shares.
  • Lucent (LU) : 11.1 million shares.

Nasdaq Most Actives

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Sector Watch

Transportation and paper stocks were rallying, while insurance stocks were faltering.

The

Dow Jones Transportation Average

, up 2.1%, was getting some lift from airline components, including Ameican Airline parent

AMR

(AMR)

,

Delta

(DAL) - Get Report

and

Southwest Airlines

(LUV) - Get Report

.

The

Philadelphia Stock Exchange Forest & Paper Products Index

rose 4% thanks to support from nearly every one of its components. Yesterday,

Bowater

(BOW)

announced that it was in a tentative deal to buy a newsprint mill from a South Korean papermaker. It was lately up 3.9%.

The

S&P Insurance Index

slid 1.1%.

Progressive

(PGR) - Get Report

was its biggest drag and was off 3%.

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Bonds/Economy

Treasuries are lower ahead of the Federal Open Market Committee's 2:10 p.m. EDT decision on interest rates. The FOMC is widely expected to leave the

fed funds rate unchanged at 6.5%, and to maintain its position that the economy is at greater risk of inflation than recession.

Economic data released today were more or less in line with expectations.

New home sales

(

definition |

chart |

source

) fell 3.0% to 893,000, while the

index of leading economic indicators

(

definition |

chart |

source

) fell 0.1%, its fifth consecutive negative or unchanged reading.

The benchmark 10-year

Treasury note lately was 6/32 lower to 99 6/32, yielding 5.865%.

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International

Most major European markets ended the day on the upside.

In London, the

FTSE 100

was up 60.50 to 6345. Banking giant

HSBC

(HBC)

was accounting for the majority of the FTSE's gains on rumors that it was in merger talks with U.S. brokerage

Merrill Lynch

(MER)

. HSBC has denied the rumors.

Across the channel, the

CAC 40

in Paris was 51.19 higher to 6400.43. The

Xetra Dax

in Frankfurt gained 64.14 to 6862.26.

After voters in Denmark decided not to join the euro last week, the single currency was lately trading at 0.8766.

Asia's major markets put in a lackluster session Tuesday, as a surging report on Japanese business sentiment failed to dispel fears about earnings warnings.

The Bank of Japan's

tankan

survey of business sentiment hit its highest level in three years, but the

Nikkei 225

was only able to eke out a 9.6-point gain to 15,912.1.

In Tokyo currency trading, the dollar fell against the yen to 108.88 yen. The greenback was lately trading at 108.60 yen.

Hong Kong's equity markets returned from a holiday Monday, but Seoul's

Kospi

index was closed for a Korean holiday. Hong Kong's

Hang Seng

index rose 77.0, or 0.5%, to 15,725.9 and Taiwan's

TWSE

index finished up 119.4, or 1.9%, at 6143.4, as the government said it would continue to use some 500 billion Taiwanese dollars ($16 billion) to support the country's equity markets.

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