Stocks gain at open

NEW YORK (CNNMoney.com) -- U.S. stocks rose early Tuesday as Federal Reserve policy makers began a 2-day meeting expected to produce another interest rate cut.

The Dow Jones industrial average was up 0.3 percent. The Nasdaq composite index added 0.4 percent. The Standard & Poor's 500 index was 0.5 percent higher.

Peter Cardillo, chief market economist at Avalon Partners, said he believes the market will be able to post modest gains as traders await a decision from the Fed due at 2:15 p.m. ET Wednesday.

"We're on Fed watch," he said. "I think we're probably going to see a muted reaction to some of the corporate news and focus on the economic news. If confidence doesn't fall off a cliff, that might be encouraging and we could see a steady day of gains on hopes of a rate cut."

There was more bad news from the housing and finance sector as embattled Countrywide Financial (CFC, Fortune 500), the nation's leading mortgage lender, reported a much larger than forecast loss for the fourth quarter.

The Wall Street Journal also reported Tuesday that pressure from regulators and members of Congress helped push Countrywide to seek a buyout by Bank of America (BAC, Fortune 500).

The paper reported that Countrywide was concerned that the Federal Deposit Insurance Corp. would start questioning the safety of funding Countrywide's large mortgage holdings through those insured deposits, and that Sen. Charles Schumer, D-NY, had raised questions with regulators about Countrywide's surge in borrowing from the nation's Federal Home Loan Banks.

Still Countrywide shares climbed 5 percent in pre-market trading as it announced it would pay a dividend for the quarter.

Early Tuesday, diversified manufacturer 3M (MMM, Fortune 500), a Dow component, reported improved earnings, excluding special items, that narrowly beat forecasts.

Dow Chemical (DOW, Fortune 500), the nation's No. 1 chemical company, reported lower earnings that still topped estimates, sending its shares up 2.6 percent in pre-market trading.

Late Monday, American Express (AXP, Fortune 500) said its profit tumbled in the latest quarter as it set aside more money to prepare for cardholder defaults. Shares of the Dow component fell nearly 3 percent in after-hours trading.

In other corporate news, Wal-Mart Stores (WMT, Fortune 500), the nation's largest retailer, announced it will chop prices between 10 to 30 percent on groceries, electronics and other home-related products.

There were numerous reports that Liberty Media (LINTA) attempted Monday to wrest control of Internet and media holding company IAC/InterActiveCorp (IACI, Fortune 500) away from its chairman and founder Barry Diller.