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Stocks Wobble as Market Waits on Fed

Stocks turned mixed Wednesday as the market waits for the Federal Reserve's decision on interest rates.

Futures had pointed higher, then stocks opened lower, before turning mixed at about the one-hour mark. It's just par for the course these days, where the market can't seem to commit to a direction for more than an hour.

Today's swings were modest, however, a welcome reprieve after recent wild swings that have burned many a trader. On Monday, stocks took off like a bottle rocket in the final two hours of trading, sending the Dow Jones Industrial Average up 889.35, its second-biggest point gain on record.

Bernard McSherry of Cuttone & Co. said he thinks we’re forming a bottom.

“I’m not saying that we’re not going to retest it but for the first time in a long time, I’m feeling some optimism down here," McSherry said. “We were talking about systemic failure a two weeks ago. I’ll take a recession and some bad earnings for a while over that.”

Indeed, the optimism seems to be translating into some buying.

As this October, one of the worst on record for stocks, draws to a close, some investors are starting to follow Warren Buffett's lead and make some hefty moves out of Treasurys and into stocks, according to Sean Murphy, Treasury trader with RBC Capital Markets, told Reuters.

Earlier, futures got a little bounce after a report showed orders for durable goods, which are items such as cars and appliances that are meant to last three years or more, rose 0.8 percent in October. Economists had expected a 1.2-percent decline. The increase was largely due to a rise in car and plane orders. Excluding transportation, orders for all other durable goods fell 1.1 percent.

Traders will be watching to see what the Fed does this afternoon. Expectations point to a rate cut of half a percentage point.

"I don't think they even need to cut," Bob McTeer, former president of the Dallas Fed, said on CNBC. "However, I think the market reaction to not cutting or even cutting a quarter-point would be unnecessary to endure."

>> Poll: How Much Do You Think the Fed Should Cut Rates? Vote Now.

Crude oil rose nearly $4, trading between $66 and $67 a barrel, after the EIA reported crude inventories rose by 500 million barrels, less than expected, last week.

Kraft posted slightly better-than-expected earnings, helped by price increases and new products that boosted sales. The company backed its full-year earnings forecast.

Procter & Gamble also beat expectations, reporting a 12 percent increase in earnings, though the company, which makes everything from Tide detergent to Pampers diapers, lowered its sales forecast for the year.

We're at the halfway mark on earnings -- 246 of the S&P 500 have reported third-quarter earnings. So far, 61 percent of the companies have beat expectations, though the actual numbers are still abyssmal: Combining actual earnings and estimates, the growth rate was minus-23.8 percent.

>> See complete earnings coverage.

Financial stocks were mostly lower, though there were a handful of standouts, including CIT Group , which jumped 10 percent, and UBS , which rose more than 5 percent.

Experts have warned that the rally must be handled with care, as there is still some downside potential in the market.

The Bank of Japan is expected to follow the Fed's lead later this week and European central banks next week.

The Treasury Department met with privately held banks Tuesday to discuss ways they could get access to fundsfrom the government's $700 billion financial rescue program, according to Reuters.

GMAC, the auto and mortgage finance company, said Tuesday it had been approved to use the commercial paper funding facility created earlier this month by the U.S. Federal Reserve with the aim of easing pressure on the corporate credit market.

In earnings news, Japan's Sony posted a 90 percent fall in quarterly profit as growing worries about the global economy sent the yen higher and hit camera sales, and the company kept its annual profit outlook of a 58 percent decline.

The issue of CEO pay resurfaced as Rep. Henry Waxman, who chairs the House Committee on Oversight and Government Reform, disclosed that he sent letters to the first nine major banks set to receive a capital injection from the government, seeking information on their compensation and bonus plans for 2008 and other years.

New York Attorney General Andrew Cuomo also said that he would be looking into the issues, though he isn't opening a formal investigation at this time.

This Week:

WEDNESDAY: Fed announcement on interest rates; Earnings from Visa after the bell
THURSDAY: Weekly jobless claims; First look at Q3 GDP; weekly natural-gas inventories; Eanrings from AstraZeneca, Colgate Palmolive, CVS/Caremark, ExxonMobil, Motorola, Royal Dutch Shell and Electronic Arts
FRIDAY: Personal income and spending; consumer sentiment; Fed's Yellen speaks; Earnings from Chevron, Clorox and Nissan

Send comments to cindy.perman@nbcuni.com.