Today's Market: Investors Wait on Fed's Verdict - TheStreet

(Updated from 12:03 p.m. EDT)

Wall Street's eyes are shifting from the ticker tape to the

Federal Reserve.

The Fed kicked off its two-day meeting about interest-rate policy yesterday in Washington, D.C. Ahead of the decision, to be announced about 2:15 p.m. EDT, the market has been quiet.

Lately, the

Dow Jones Industrial Average was up 52 points, or 0.5%, to 10,524, while the

Nasdaq Composite was ahead 15 points, or 0.8%, to 2080. The

S&P 500 was higher by 2 points, or 0.2%, to 1219. Volume was light on the

New York Stock Exchange and Nasdaq.

Since January, the central bank has cut the

fed funds rate, or the rate at which banks lend to each other overnight, five times. (The rates have gone from 6.5% to 4% since the beginning of the year.) The current

fed funds futurescontract, a good proxy for monetary policy, is pricing in a 100% chance of a quarter-percentage point cut and 40% odds of a half-percentage point cut.

Some market analysts think it would be a positive sign if the Fed dropped rates by just a quarter-percentage point instead of a more aggressive half-percentage point. "After having an initial negative reaction to a smaller cut, the market would take it to mean the Fed sees the economy picking up," said Peter Coolidge, managing director of trading at

Brean Murray Foster Securities

. "The market wants to see the fruits of the five rate cuts we've already had this year."

Indeed, investors are increasingly looking for evidence that the rate cuts are helping. Yesterday's economic reports on

durable goods orders, new home sales and consumer confidence each showed some strength. Coolidge said: "It would be bullish if the Fed says, in its comments today, that it has started to see pockets of the economy stabilizing."

Wall Street has continued to get mixed signals from corporate America. After the closing bell yesterday, a couple of tech companies confessed to weakness in their bottom lines. Chipmaker

Xilinx

(XLNX) - Get Report

, lately off 9.1% to $39.86, lowered its revenue forecast, and networking-equipment maker

3Com

(COMS)

, down 4.8% to $4.61, missed its fourth-quarter earnings estimates.

But there was some encouraging news. Handheld-device maker

Palm

(PALM)

reported fiscal fourth-quarter earnings that beat analyst estimates. And software giant

Oracle's

(ORCL) - Get Report

CEO, Larry Ellison, said in a press conference that the current quarter "looks a lot stronger." In recent trading, Palm was jumping 22.4% to $6.34. Oracle, however, was off 1.3% to $18.19.

Since the beginning of the year, the Dow is down 3%, as of yesterday's close, while the Nasdaq is lower by 16%. Ahead of the decision today, economically sensitive sectors of the market were moving tentatively higher: Both financial and cyclical groups were slightly up. Defensive groups, such as pharmaceuticals and consumer staples, were modestly lower.

Market Internals

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International

European markets were mixed today, as they waited on the U.S. rate-cut decision. After closing at a 12-week low yesterday, London's

FTSE 100

gained 46.5 points to 5652.2. Across the channel, the Paris

CAC-40

fell 33 to 5057.7. Frankfurt's

Xetra Dax

-- which is still trading -- was recently off 14.4 to 5833.4.

Asian markets were mixed overnight. Tokyo's

Nikkei 225

fell 1.15%, or 149.84 points, to 12,828.98. Hong Kong's

Hang Seng

lifted 42.24, or 0.33%, after a steep decline Tuesday.

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