Wall Street gears up for Fed

NEW YORK (CNNMoney.com) -- Stocks struggled Wednesday morning as investors welcomed upbeat earnings from Oracle and Morgan Stanley, but showed caution ahead of the Fed's latest comments on the economy and interest rates.

The Nasdaq (up 1.12 to 2,409.33, Charts) composite straddled the breakeven mark some three hours into the session. The Dow Jones industrial average (down 14.26 to 12,273.84, Charts) lost a few points and the broader S&P 500 (up 0.60 to 1,411.54, Charts) index was little changed.

Stocks rose for the second straight session Tuesday after an encouraging housing sector report soothed some worries about the health of the economy, as the Fed meeting got under way.

The central bankers are widely expected to hold a key short-term interest rate steady at 5.25 percent for the sixth time in a row when the meeting ends Wednesday. A decision is expected at around 2:15 p.m. ET.

As always, investors will be attuned to what the statement says about the outlook for the economy and interest rates. In addition, investors will be looking to see if the Fed bankers address the recent fallout in subprime mortgage lenders. (Full story)

Treasury prices slipped ahead of the Fed announcement, raising the yield on the 10-year note to about 4.57 percent from 4.54 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar rose versus the euro and the yen.

Among stock movers, Morgan Stanley (up $3.15 to $79.26, Charts) shares jumped after the bank reported higher earnings that topped estimates.

Oracle (up $0.45 to $18.00, Charts) shares also rallied after the software maker posted quarterly sales and earnings that rose from a year ago. Earnings were released after the close Tuesday.

Also after the close Tuesday, Adobe Systems (up $1.82 to $42.56, Charts) reported higher profits that topped estimates on lower sales that missed forecasts. The stock gained Wednesday morning.

Wednesday morning, FedEx (down $2.34 to $109.95, Charts) reported lower quarterly earnings that topped estimates and issued a 2007 forecast that is short of expectations. Shares slipped. (Full story)

SanDisk (up $1.46 to $43.37, Charts) rose after the flash memory chip maker reached a patent agreement with South Korea's Hynix Semiconductor.

Market breadth was positive. On the New York Stock Exchange, winners topped losers 8 to 7 on volume of 370 million shares. On the Nasdaq, advancers narrowly edged decliners on volume of 550 million shares.

U.S. light crude oil for May delivery fell 30 cents to $59.30 a barrel on the New York Mercantile Exchange, following the release of the weekly oil inventories report.

COMEX gold for May delivery rose $2.30 to $661.30 an ounce.

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