Earnings misses took a bite out of the market’s rebound of the past few days.

The NYSE composite was up 0.4%, the Nasdaq composite down 0.2% at 12:54 p.m. EST. The S&P 500 clung to a 0.2% gain, while the Dow climbed 0.8%.

Small caps slipped, with the S&P 600 dropping 0.1%. A strong jump in transportation sector durable goods orders gave the sector a boost, with the Dow Transports showing a 1.5% gain. NYSE volume eased, but was still up 7%. Trading was 12% higher on the Nasdaq. Advancing issues led decliners by 3-to-2 on the NYSE and by a narrow margin on the Nasdaq.

The Electrical-Parts Distributor group posted the best gain by midday, hoisted higher by Anixter International’s () gap-up gain of 11.08 to 69.38. The 19% jump followed a Q4 earnings and sales report that topped expectations. The company reaffirmed its ‘08 profit guidance. Anixter has slumped since a steep run-up to highs in July. Tuesday’s move punched the stock above its 50-day moving average to just below its 200-day line. The two averages inverted — generally a bad sign for stocks — early in December.

The cement-aggregates producers and specialty steel makers also were among the day’s best industries, each adding 3.6%. All eleven stocks in the construction materials group logged gains, led by aggregates heavyweight Martin Marietta Materials (), which rose 3.68 to 115.13.

Bankrate () gapped up, gaining 3.51 to 51.51 on powerful volume. The mortgage-shopping Web site has gained through the past five sessions. The stock has been consolidating since hitting highs in May 2006.

Mining equipment maker Bucyrus International () kept raking in gains, rising 1.71 to 87.01. The Wisconsin-based company has climbed through six of the past seven sessions and is set to test resistance at its 50-day moving average.

U.S. Steel () weighed heavy on the downside, turning in a 9.24 loss to 100.83 on heavy volume. The steel-making icon, citing charges related to layoffs and acquisitions, reported an 88% plunge in Q4 earnings. The stock has slumped since hitting highs in June.

11:15 a.m. Update: Stocks Mixed Amid Rate-Cut Expectations, Earnings, Economic Data

By ALAN R. ELLIOTT

Stocks evened out to near the midpoint of the morning session, leaving indexes mixed in higher volume.

The NYSE composite was up 0.3%, the Nasdaq down 0.3% at 10:55 a.m. EST. The Nasdaq’s computer and industrial indexes provided the heaviest drag, while its transport index rose 1.7%. The S&P 500 held a 0.2% gain; the Dow was 0.3% higher. Volume swelled 13% on the NYSE, 11% on the Nasdaq.

Overseas, Asian markets generally traded higher. China’s exchanges turned in mild gains for the day. Tokyo’s Nikkei 225 leapt 3% higher, sparked by Japan’s largest shipping company, Nippon Yusen.

Most European exchanges also gained, with London’s FTSE 100 ending up 0.9% and France’s CAC-40 posting a 1.3% rise.

The dollar reversed out of an early rally vs. the yen and euro, slipping as currency traders positioned themselves ahead of the Fed’s expected rate cut. Bond prices also fell, driving the 10-year bond yield to 3.66%, up from 3.59% late Monday. That market shows signs of less panic-driven flight to safety. The auction yesterday of two-year T-notes was not too well received, with a noted lack of interest from foreign central banks.

The Consumer Confidence Index came in above expectations but was still 3% below December’s levels and at its lowest levels since the post-Katrina slide in 2005. The Conference Board said the weak housing market, tighter credit, higher oil prices and economic gloom all contributed, although inflation expectations did ease slightly.

DryShips () gained 3.34 to 62.63 in heavy volume. The dry-bulk shipper tumbled out of a steep uptrend in November. It is now well below its 10- and 40- week moving averages, and 52% below its Oct. 29 high.

Another in that field, Excel Maritime (), fell 2.38 to 30.62 after announcing it would buy smaller rival Quintana Maritime () for about $2.45 billion. Shares of Quintana gapped up, gaining 4.38 to 21.27.

Uggs boot maker Deckers Outdoor () rose 3.94 to 122.32. The move extended the stock’s rebound from its 200-day moving average.

Smith International () tanked 7.15 to 54.89 in huge volume after missing Q4 earnings and sales views. The stock, which had been trying to climb out of an 11-week base through December, is now 29% off its Jan. 3 high.

10:15 a.m. Update: Stocks Mixed As Early Gains Fade

By ALAN R. ELLIOTT AND VINCENT MAO

The major stock indexes, which opened higher Tuesday, have turned mixed.

At 9:53 a.m. EST, the NYSE composite and S&P 500 each rose 0.2%. The Dow added 0.1%. Meanwhile, the Nasdaq slipped into negative territory with a 0.1% loss.

Volume was tracking higher on both exchanges in the early going.

In economic news, the S&P/Case-Shiller 20-city home price index fell 2.1% in November. On a year-over-year basis, the index tumbled a record 7.7%.

Chattem () gained 7.43, or 11%, to 75.34 in brisk trading. The maker of over-the-counter drugs, cosmetics and dietary supplements said Q4 earnings excluding items more than tripled to 81 cents a share, easily topping views of 65 cents. It pegged full-year 2008 profit between $3.79 and 3.99 vs. a $3.83 consensus.

The solar energy group was not having a great morning, though Phoenix-based First Solar () did bump up 7.17 to 184.17. It was the 13-month-old stock’s fifth gain in seven sessions and continued a rebound from its 200-day moving average. First Solar is 35% below its Dec. 26 high.

On the downside, Dolby Laboratories () dropped 2.10, or 5%, to 42.44 in fast trade. The audio technologies firm reports fiscal Q1 results on Jan. 31. Analysts see profit rising 19% to 32 cents a share on sales of $134.7 million.

OptionsXpress () slipped 1.26 to 28.46. The online broker reported Q4 EPS above consensus but missed sales expectations. Shares rebounded from their 40-week line over the past two weeks but remain below their 10-week moving average. The stock has been consolidating since Dec. 28.

9:15 a.m. Update: Durables Give Futures A Lift

By VINCENT MAO

Futures signaled a slightly higher open Tuesday ahead of the start of the Fed’s two-day meeting.

Nasdaq futures climbed 10 points vs. fair value, S&P 500 futures rose 8 points, and Dow futures gained 30 points.

The Federal Open Market Committee begins deliberating on interest rates today. Its decision is due Wednesday, usually at around 2:15 p.m. EST.

Orders for durable goods surged 5.2% in December, thanks to strong demand for aircraft, communications gear and defense goods. That was the biggest in five months and well ahead of expectations of 1.5%. Excluding transportation, demand rose 2.6%. Futures extended gains after the news.

The dollar rallied against the euro and the yen.

Consumer confidence for January will be out at 10 a.m. EST. Economists expect a dip to 87 from 88.6 in December.

3M () slipped 1% in pre-market trading. The diversified manufacturer reported Q4 earnings of $1.19 a share excluding items, up 8% from a year ago and 2 cents ahead of views. Sales climbed 7.3% to $6.21 billion, also above views. 3M expects 2008 earnings to come in at least 10% above its 2007 income of $4.98 a share.

Shares of EMC () dropped 8% in the pre-open as traders focused on a sales miss by VMware (), which is majority-owned by EMC.

EMC, a maker of data storage products, delivered a fourth-quarter profit of 24 cents a share, up 26% from a year earlier and above views. Sales climbed 19% to $3.83 billion, also ahead of estimates. EMC guided full-year sales and earnings above consensus. Shares of VMware plunged 25%.

Countrywide Financial () jumped 6% in the pre-market despite posting a Q4 loss of 79 cents a share, compared with a profit of $1.01 a share in the year-ago quarter. Analysts had expected a 30-cent shortfall. Due to troubling housing market conditions, the mortgage lender set aside $924 million. Countrywide also booked an impairment charge of $831 million tied to mortgage-related securities.

Earlier this month, Bank of America () said it would buy the lender for $4 billion.

Wal-Mart () is doing its part to stimulate the economy. The world’s largest retailer will cut prices by 10% to 30% on thousands of items this week. Shares edged higher in the pre-market.

Yahoo () gained 1% in the pre-open. The Internet search firm reports earnings after the close. Analysts expect 11 cents a share, down 42% from a year earlier.