NEW YORK (AP) – Wall Street tottered in search of a direction Tuesday as investors waited to see what the Federal Reserve will do next to steady the markets and the economy.

Stocks moved slightly higher in volatile trading after Senator Dodd, Democrat of Connecticut, the chairman of the Senate Banking Committee, said Fed Chairman Ben Bernanke isn’t satisfied with Wall Street’s response to the central bank’s efforts to stabilize markets that have been torn by anxiety about shrinking credit. Mr. Dodd, after a meeting with Mr. Bernanke and Secretary of the Treasury Paulson, said policymakers plan to use “all tools available” to complete its mission.

Wall Street remains worried that the broadening credit crisis triggered by distressed subprime loans will curtail borrowing to the point where it hurts companies across the economy. The Fed has taken a number of steps to prop up the nation’s financial institutions, including injecting more liquidity into the banking industry and cutting the discount rate.

But many on Wall Street want the Fed to do more, including lowering the more important federal funds rate, and to do it soon. Any moves by the Fed to come back into the market was seen as a positive by Wall Street traders in light of continued jitters.

On Tuesday, speculation grew that troubled Countrywide Financial Corp. might be a takeover target due to losses linked to distressed subprime mortgages. And, investors expected more layoffs after Capital One Financial Corp. said it was shuttering its GreenPoint Mortgage unit and slashing 1,900 jobs.

“There are two camps out there, one that thinks we need a rate cut and the other doesn’t feel the economy has slowed enough to warrant one,” said Janna Sampson, director of portfolio management at Oakbrook Investments. “I think which camp leads on each day, or even each hour, is what is leading to all this volatility. There’s just too much uncertainty.”

In midday trading, the Dow Jones industrial average rose 14.71, or 0.11 percent, to 13,136.06, having bounced in and out of positive territory.

Broader stock indicators were also higher. The Standard & Poor’s 500 index was up 5.87, or 0.41 percent, at 1,451.42, and the Nasdaq composite index rose 10.36, or 0.41 percent, to 2,518.95. The Russell 2000 index of smaller companies added 3.85, or 0.49 percent, to 791.30.

The session followed the erratic pattern of Monday, when the Dow changed course several times and swung in a 200-point range before closing only slightly higher. Traders have been trying to find their footing following the Fed’s decision to cut the discount rate on Friday.

Bonds continued to rally, with the yield on the benchmark 10-year Treasury note at 4.60 percent from 4.63 percent late Monday. Investors have bailed out of stocks due to recent volatility, and moved swiftly into safer investments like Treasuries.

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

Oil prices fell $1.65 to $69.47 on the New York Mercantile Exchange. Investors have been wary as Hurricane Dean picks up pace toward Mexico, where major oil companies like state-run Pemex Oil have already battened down oil rigs in the Gulf of Mexico.

With no major economic reports scheduled, investors are expected to pore over a number of earnings reports from retailers to gauge the health of consumer spending.

Capital One shares rose $1.33, or 2 percent, to $68.05 it announced changes to its mortgage lending strategy. Meanwhile, rumors that Countrywide might be vulnerable to a takeover attempt – possibly from billionaire investor Warren Buffett – sent its shares up $1.34, or 6.8 percent, at $21.15.

BJ’s Wholesale Club Inc. reported second-quarter profit rose 37 percent to surpass projections, and its shares rose $1.34, or 4.4 percent, to $32.13. Meanwhile, Target Corp. added 11 cents to $59.20 after it reported profit grew 13 percent.

Staples Inc., the largest American office supplies retailer, reported a higher quarterly profit on Tuesday, matching Wall Street projections. However, it issued a cautious forecast for the rest of the year. The stock fell 52 cents, or 2.2 percent, to $22.79.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume came to 52.3 million shares.

Overseas, Britain’s FTSE 100 fell 0.55 percent, Germany’s DAX index shed 0.14 percent, and France’s CAC-40 dropped 0.27 percent. In Asia, Japan’s Nikkei stock average rose 1.07 percent. Hong Kong’s Hang Seng Index rose 0.62 percent.

China’s central bank said Tuesday it would raise its benchmark lending and deposit rates to curb inflation. The often-volatile Shanghai Composite Exchange rose 1.03 percent.

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