Stock prices were mostly higher in indecisive action ahead of the FederalReserve's much-anticipated rate decision and accompanying statement Tuesdayafternoon.
"I don't think we'll see much direction until we have a clear picture in termsof what the Fed is thinking and any type of commentary around the whole subprimeissue," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank.
The Dow Jones Industrial Average (DJI) was 10.4 points higher at 13,478.4,with half of its 30 components on the decline.
The S&P 500 (SPX) was up 3.78 points at 1,471.75, while the Nasdaq Composite (RIXF) was 1.06 points off at 2,546.27.
Trading volume showed 954.6 million shares exchanging hands at the New YorkStock Exchange and 1.2 billion shares trading on the Nasdaq stock market.Declining issues ran about even with advancers on both exchanges.
"A lot of the volatility has to do with anticipation of what the Fed might ormight not do," said Paul Mendelsohn, chief investment strategist at WindhamFinancial Services. "Labor costs are still running at the higher end here,that's something the Fed has to keep an eye on."
Automaker General Motors Corp. (GM) fronted the Dow's advancing stocks, gained2% after GM said it completed the sale of its Allison Transmission commercialand military business to the Carlyle Group and Onex Corp. for about
Shares of leading U.S. banks and brokerage firms were mixed, with the stock ofinsurer
Lehman Bros. analysts began coverage of private-equity and hedge fund
Fed factor
The highlight of Tuesday's session will be the
But many investors suspect that recent problems in the credit markets willforce the Fed to note concern about an economic slowdown in its policystatement. For many months the Fed's top worry has been inflation.
Such a change in stance could pave the way for a rate cut in coming months.
Sentiment is likely to be cautious before the statement comes out. "Anythingis possible before the Fed because we won't know anything until we see thestatement," said Peter Boockvar, equity strategist at Miller Tabak. "
"We need to see the statement to see whether they are more focused oninflation or whether they acknowledge the weakness in the economy and thepotential impact of credit problems on the economy," Boockvar said.
Earlier, the Labor Department reported that productivity in the second quarterrose 1.8%, below the 2.1% gain expected by economists polled by MarketWatch.
The wages and benefits component of the report suggested inflation may remainworrisome. The department said that unit labor costs - a key inflationary signal- rose at an annual rate of 2.1% in the second quarter. Economists had expecteda 1.6% gain.
Other market moves
Treasury prices were mildly higher as the market awaited the Fed's interestrate decision, with the benchmark 10-year Treasury note up 1/32 at 98 5/32,yielding (TNX) 4.738%.
The dollar rallied against European currencies after a government reportshowed a larger-than-expected rise in unit labor costs - an indication ofinflation. In
Gold futures edged lower, with Gold for December delivery off
Crude-oil futures extended their losses, weighed down by technical selling,weakness on Wall Street and ongoing concern that an economic slowdown will lowerenergy demand. Crude oil for September delivery fell
On Monday stocks staged a strong comeback, after suffering a rout at the endof last week when investors dumped shares on fears the credit crunch isspreading throughout the economy.
(END) Dow Jones Newswires
