Stocks mixed; investors see rate cuts

NEW YORK – Wall Street ended an erratic session mixed Monday as investors grew more confident that the Federal Reserve will lower interest rates again to ward off recession and as they also wrestled with worries about the upcoming earnings season.

The market contended as well with a resurgence of tensions between the U.S. and Iran.

Investors have grown more optimistic about a rate cut at the Fed’s Jan. 29-30 meeting after last week’s disappointing reports on jobs and manufacturing pointed to a slowing in the economy during December. And, they might get some clues about the central bank’s stance when its chairman, Ben Bernanke, delivers a speech on Thursday.

That optimism kept stocks from falling far during a session that saw the major indexes reverse course several time. But Wall Street remained uneasy as it awaited fourth-quarter earnings season, which unofficially starts Wednesday, when aluminum producer Alcoa Inc. posts results. Analysts said investors will be paying particular attention to financial services stocks that have been hit hard by the ongoing credit crisis.

The Dow Jones industrial average rose 27.31, or 0.21 percent, to 12,827.49, after moving in and out of positive territory throughout the session.

Broader stock indicators ended mixed. The S&P 500 index rose 4.55, or 0.32 percent, to 1,416.18, and the tech-focused Nasdaq composite index fell 5.19, or 0.21 percent, to 2,499.46.

It was seventh straight session of losses for the Nasdaq, which greatly outperformed the Dow and the S&P in 2007.

Last week, in just the first three trading days of 2008, the Dow lost 3.50 percent, the S&P 500 index fell 3.86 percent, and the Nasdaq dropped 5.57 percent.

Overseas, Japan’s Nikkei stock average closed down 1.30 percent. Britain’s FTSE 100 fell 0.20 percent, Germany’s DAX index added 0.11 percent, and France’s CAC-40 was up 0.11 percent.