Lehman Brothers, Goldman Sachs Beat 1Q Expectations

Lower rates tend to trigger economic growth. But with the credit markets so tight with nervousness, many market watchers are unsure whether more rate cuts are going to be enough to loosen them up again.

Bond prices fell as investors returned to stocks. The yield on the benchmark 10-year Treasury note, which move opposite its price, rose to 3.39 percent from 3.30 percent late Friday.

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

Light, sweet crude rose $1.87 to $107.55 per barrel on the New York Mercantile Exchange.

On Monday, the Dow rebounded from an initial drop of nearly 200 points to finish up 21 points. The S&P 500 and Nasdaq indexes ended lower as investors fled to larger, established companies.

The strongest stock among the Dow components on Monday was JPMorgan, which rose another $1.47, or 3.7 percent, to $41.78 Tuesday. As of Monday's close, JPMorgan's buyout valued Bear Stearns at $2.21 a share, or $260.5 million (euro165.19 million).

Wall Street was not concentrating on economic data with the Fed's rate decision on tap, but Tuesday's reports supported the notion that the U.s. economy is continuing to slide while costs are rising.

The Commerce Department said home construction fell in February: housing starts fell 0.6 percent, while building permits plummeted 7.8 percent.

Meanwhile, the Labor Department reported a 0.3 percent rise in its Producer Price Index for February, in line with estimates, but the core PPI, which strips out food and energy prices, rose by a greater-than-expected 0.5 percent.