Stocks seesawed in trading Tuesday, a day after the major indices saw their largest %age drop since April 20th. Traders got some direction in the morning after existing home sales rose 2.4% in May. By the closing bell, stocks stood with a mixed finish ahead of Wednesday’s FOMC announcement. Equities will continue to falter as long as signs of economic improvement are mild to flat, compared to the drastic improvement hat led the market up over 30% since March. The Dow Jones industrial average fell 16.10, or 0.2 %, to 8,322.91. The Standard & Poor’s 500 index rose 2.06, or 0.2 %, to 895.10, and the Nasdaq composite index fell 1.27, or 0.1 %, to 1,764.92. The Russell 2000 index of smaller companies fell 3.04, or 0.6 %, to 489.77.

Yields continued their march downward as prices on government debt rose. The yield is a good indication of investor confidence within the equity market. The yield on the 10 year U.S. treasury fell 4 basis points to 3.65%.

Morning Outlook

Markets in Asia rose Wednesday ahead of the fed statement here in the United States. Japan’s benchmark Nikkei 225 stock average rose 40.71 points, or 0.4 %, to 9,590.32 despite figures showing the weakest exporting numbers the country has faced in the post war era. Hong Kong’s Hang Seng rose 353.78 points, or 2 %, to 17,892.15

In direct conflict with the World Bank’s forecast yesterday, the Organization for Economic Cooperation and Development raised its forecasts for the economy; expecting the combined economy of the world’s most- industrialized countries will shrink 4.1 % this year and grow 0.7 % in 2010. The number was upwardly revised by 2 basis points.

In Europe stocks were moderately higher on the news, following gains in Asia. In late morning trading, the FTSE 100 index of leading British shares was up 8.01 points, or 0.2 %, at 4,238.03 while Germany’s DAX rose 38.27 points, or 0.8 %, to 4,745.42. The CAC-40 in France was 15.17 points, or 0.5 %, higher at 3,132.

Before the market’s open, very light volume and little volatility looks to send the major indices toward a higher open/ Dow futures rose 38, or 0.5 %, to 8,295. Standard & Poor’s 500 index futures rose 3.80, or 0.4 %, to 894, and Nasdaq 100 index futures rose 4.00, or 0.3 %, to 1,428.

On the Corporate Front

Software maker Oracle (ORCL) beat the street in its fiscal 4th quarter where net income from March through May came in at $1.89 billion, or 38 cents per share. In the same period last year, the bottom line was $2.04 billion, or 39 cents per share. Sales fell 5% to $6.86 billion, easily beating Wall Street estimates.

Economic Calendar

8:30 AM
Durable goods orders: Measures the month over month change in orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. Usually durable goods orders follow the trend in consumer spending, and therefore, a measure of strength in the economy. The consensus estimate is for a half a % decline in May, following a 1.7% increase in April.

10:00 AM
New Home Sales: Measure the number of newly constructed homes with a committed sale during the month of May. The level of new home sales indicates trends in the housing market. Don’t expect new home sales to pick up until we can unclog the inventory of existing homes. For May, new home sales are expected to be at a seasonally adjusted annual rate of 365,000 after rising 0.3% in April to 352,000.

10:30 AM
EIA Petroleum Status Report: The Energy Information Administration (EIA) provides weekly information on petroleum inventories in the U.S. Oil prices have ticked up as OPEC continues production cuts to meet its quota, despite continued stockpiles. Trading on the NYMEX has been primarily driven by the direction of equities and the level of optimism of a sooner rather than later economic recovery.

2:15 PM
The FOMC will announce their decision on interest rates and other open market operations. Target rates are expected to stay the same, however markets will be focusing on language in the text indicating any specifics about further Fed balance sheet initiatives and on what the Fed’s views are about economic growth are.