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Wall St. hinges on Fed
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May 15, 2001: 6:26 a.m. ET
Anxious trading seen before rate decision, reaction to dominate day's end
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NEW YORK (CNNfn) - Tuesday's meeting of Federal Reserve policy makers and their decision on interest rates is expected to divide Wall Street's day into two parts: cautious trading before the decision is announced, and investors' reaction afterward.
Stock futures see-sawed in the early morning hours. Nasdaq futures were higher when fair value was taken into account, indicating a higher start for the Nasdaq market. Standard & Poor's futures were little changed, pointing to a flat open for the S&P 500 and Dow Jones industrial average.
Most economists still believe the Fed will cut rates by a half percentage point, the fifth cut of that size in 2001. But there's a question about what the policy makers will say about their outlook for the economy and the future direction of interest rates. If they see -- as some recent data seem to indicate -- nascent signs of economic recovery, they may be less inclined to cut rates again soon.
 How investors feel about the statement will have a big influence on the markets this afternoon. They could worry that if the Fed backs away from its easing trend, slumping corporate profits won't have a chance to recover by year end. Or they could be positive, interpreting the Fed's statement as a sign that the economy is recovering -- and that soon profits will, too.
The Nasdaq composite index stands at 2,081.92 after a 1.2 percent decline Monday. The Dow Jones industrial average is at 10,877.33 following a 56-point advance, while the S&P 500 begins at 1,248.92 after gaining 3 points.
Asia's markets closed mixed Tuesday, although Tokyo rose partly due to speculation that Crown Princess Masako is pregnant with a potential heir to the throne. European markets were mixed ahead of the Fed's rate announcement.
Treasury prices edged higher. The 10-year note yield slipped to 5.43 percent from 5.44 percent late Monday, while the 30-year bond yield held at 5.85 percent.
The dollar gained against the yen but slipped versus the euro. Brent oil futures declined 2 cents to $28.34 a barrel in London.
As if a Fed meeting isn't enough, the two retail components of the Dow Jones industrial average reported fiscal first-quarter results. No. 1 retailer Wal-Mart Stores (WMT: Research, Estimates) posted a profit increase to 31 cents a share from 30 cents a year earlier, matching a consensus of analysts surveyed by First Call. Wal-Mart shares closed Monday at $54.35, up 25 cents.
Home Depot (HD: Research, Estimates), the leading home improvement retailer, reported earnings of 27 cents a share, matching results of a year earlier and topping analysts' forecasts by 2 cents. The company's shares slid 73 cents to $49.15 Monday.
 Several other retailers were due to report results before the opening bell, including J.C. Penney (JCP: Research, Estimates), clothing specialist TJX (TJX: Research, Estimates), home products merchant Williams-Sonoma (WSM: Research, Estimates) and jeweler Zale (ZLC: Research, Estimates).
Semiconductor maker Applied Materials (AMAT: Research, Estimates) reports its results after the closing bell. The company is expected to post an earnings drop to 33 cents a share from 53 cents a year earlier. Applied's shares fell $2.02 to $49.69 Monday.
Also due to report after the bell are fiber-optics maker Brocade Communications Systems (BRCD: Research, Estimates), chipmaker QLogic (QLGC: Research, Estimates), networking equipment maker Sycamore Networks (SCMR: Research, Estimates) and retailer Abercrombie & Fitch (ANF: Research, Estimates). 
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