Dow falls, Nasdaq rises
ahead of Fed meeting

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By Lisa Singhania
Associated Press

NEW YORK >> Caution asserted itself on Wall Street today as investors collected their wins from last week's advance but shied away from new commitments ahead of a Federal Reserve meeting.

Analysts said Wall Street, still unsure about the prognosis for earnings improvement, wanted to hear what the central bank would say tomorrow about the economy, and in turn, interest rates, before making any big moves. Volume was light in lackluster trading.

The Dow Jones industrial average closed down 29.48 at 10,577.75. Broader stock indicators were mixed. The tech-centered Nasdaq composite index rose 8.76 to 1,877.06. The Standard & Poor's 500 index slipped 0.61 to 1,165.55.

Advancers led decliners nearly 3 to 2 on the New York Stock Exchange, with 1,767 up, 1,394 down and 189 unchanged. Volume came to 1.14 billion shares, compared with 1.48 billion Friday. Trading was unusually heavy Friday because of the expiration of stock futures and options.

The NYSE composite index edged up 0.11 to 607.24, the American Stock Exchange composite index rose 5.78 to 897.43 and the Russell 2000 index was up 3.68 at 502.80.

The Treasury's 2-year note was unchanged at 98 2932; its yield rose 1 basis point to 3.59 percent. The 10-year note gained 632 to 96 34; its yield lost 3 basis points to 5.30 percent. The 30-year bond rose 1 2/32 to 95; its yield fell 3 basis points to 5.73 percent.

Tomorrow's Fed meeting (decision at 9:15 a.m. HST) is expected to provide some clue as to when interest rates will start climbing. The Fed, which cut rates 11 times last year to stimulate growth, is expected to begin boosting them later this year as signs increase that business is rebounding. Higher interest rates make it more expensive to borrow money, so raising them is one way to ensure that growth doesn't get out of hand and expose the economy to inflation.

"The market's going to be in a little bit of a holding atmosphere as we await the Fed meeting even though the outcome should be as expected, which is no interest rate increase" this time, said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.

"It could spook the market, though, if they shift their bias and indicate that an increase is coming."

In trading today, Hewlett-Packard advanced 20 cents to $19.25 ahead of a shareholder vote tomorrow on its plan to merge with Compaq, which was up 3 cents at $10.36. The vote is considered too close to call. Qwest Communications International rose 33 cents to $9.01 on news it repaid $608 million of its $4 billion unsecured bank credit.

But Microsoft dropped 35 cents to $62.14 after nine states told a judge the software company should be forced to release the blue- prints for its Internet browser to give competitors a fair chance. They made that contention at the start of a court proceeding that will determine whether Microsoft should face penalties in addition to its antitrust settlement with the federal government.

Blue chips also languished. Merck fell 96 cents to $58.79, while Boeing dropped 35 cents to $47.63.

Investors bid lower two brokerage firms expected to report earnings later this week. Goldman Sachs fell 80 cents to $89.20, while Lehman Brothers slipped 53 cents to $64.55.