Stocks Waver As Uncertainty Remains

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Stocks Fluctuate As Wall Street Tries to Assess Federal Reserve's Next Move

Wall Street wavered in early trading Monday as investors tried to assess whether the Federal
Reserve will keep lowering interest rates.

Trading was expected to be uncertain after the market's big rally Friday in response to the Fed's
lowering of its discount rate, the interest it charges on its loans to banks. The Fed said it would
stand ready to make further moves to keep credit market losses from hurting the economy, but
because it stopped short of a cut in the more important federal funds rate, uncertainty remained on Wall Street about the Fed's intentions. The Fed is not scheduled  to meet formally
until Sept. 18, and investors are expected to remain jittery until then.

Analysts also questioned how much conviction buyers had, as much of the previous session's rally
was pinned on big institutional investors like hedge funds buying shares to cover their positions.
Some investors had been shorting the market -- betting stocks would move lower -- and were
caught off guard when the central bank cut the discount rate.

Right after the market opened, the Fed also announced it injected another $3.5 billion into the
banking system. The central bank has infused the market with nearly $120 billion of liquidity since
last week.

In the first hour of trading, the Dow Jones industrials rose 1.46, or 0.01 percent, to 13,080.54.
Broader indexes were also higher. The Standard & Poor's 500 index fell 2.59, or 0.18 percent, to
1443.35; the Nasdaq composite index fell 1.37, or 0.20 percent, to 2,504.06.
Bonds, which have rallied in recent weeks as investors fled to safe-haven securities, continued to
move higher. Yields on the benchmark 10-year Treasury bond fell to 4.66 percent from 4.68 late
Friday.

Oil prices fell $1.12 to $70.86 in premarket trading on the New York Mercantile Exchange. Investors have been wary as Hurricane Dean heads toward Mexico, where major oil companies have already
begun battening down oil rigs in the Gulf of Mexico.

The dollar was mixed against major currencies, while gold prices fell.

This week will be light on economic reports, which makes it a bit more
difficult for investors to assess what the Fed might do at its rate-setting
meeting.

The Conference Board on Monday will report on leading economic indicators. The index is expected to rise 0.3 percent for July, compared with June's 0.3 percent decline.

Also Monday, the Chicago Federal Reserve releases its July index on national business activity.