Stocks were little changed today as Wall Street traded nervously and lightly ahead of tomorrow’s decision by the Federal Reserve on interest rates.

Most investors are betting on a quarter-point cut in the benchmark federal funds rate Tuesday. And with recent weak economic data — such as a decrease of 4,000 jobs in August and weaker-than-expected retail sales — some anticipate a half-point rate cut. It’s still possible, though, that the Fed might not go through with a rate cut at all, if it believes the economy is still growing moderately and that inflation remains a threat.

Keeping Wall Street anxious about the financial sector, Northern Rock, Britain’s fifth-largest mortgage lender, saw its stock plummet for the second straight session today, after issuing a profit warning Friday and getting cash from the Bank of England.

In mid-morning trading, the Dow Jones industrial average rose 4.72, or 0.04 percent, to 13,447.24.

Broader stock indicators also dipped. The Standard & Poor’s 500 index was off 2.93, or 0.20 percent, to 1,481.32, and the Nasdaq composite index lost 12.03, or 0.46 percent, to 2,590.15.

Bonds slipped, pushing the yield on the 10-year Treasury note up to 4.49 percent from 4.48 percent late Friday.

Trading volumes were lower than normal, indicating that many market participants were staying on the sidelines ahead of the Fed’s decision.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 175.1 million shares.

Last week, stocks saw sizable gains, due largely to high expectations of a rate cut. The Dow ended up 2.51 percent, the Standard & Poor’s 500 index rose 2.11 percent, and the Nasdaq composite index rose 1.42 percent. The Dow is just 4 percent below its all-time high of 14,000.41, reached in July before fears escalated about bad home loans and excessive leveraged debt.

The prospect of a recession has been keeping the markets volatile.

Alan Greenspan, the former Fed chairman, said in an interview with NBC before the markets opened today that the risk of a recession is higher than it was at the beginning of the year, but not by much.
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Meanwhile, American Treasury Secretary Henry Paulson said in Paris that regulators should not rush to impose new rules on the market because of the recent tightening in credit.

In corporate news, a European Union court dismissed Microsoft Corp.’s appeal against an EU antitrust order to share communications code with rivals and sell a copy of Windows without Media Player. The order also upheld a $613 million fine for the company. Microsoft, one of the 30 Dow components, fell 29 cents to $28.75.

The dollar rose versus the pound, but fell against the euro and the yen.

Gold prices jumped.

Crude oil prices gained 71 cents to $79.81 a barrel on the New York Mercantile Exchange, rising back toward last week’s record levels above $80.

In European trading, Britain’s FTSE 100 fell 1.25 percent, Germany’s DAX index rose 0.05 percent, and France’s CAC-40 fell 1.11 percent.

Japanese markets were closed Monday for a holiday, and China’s volatile Shanghai Composite Index rose more than 2 percent to another record, but most Asian stocks fell. Hong Kong’s Hang Seng Index declined 1.20 percent.

No major companies release earnings on Monday, but later in the week, the major investment banks — Bear Stearns, Lehman Brothers, Morgan Stanley and Goldman Sachs — release their third-quarter results. Investors are eager to see how the banks fared during August’s tighter credit and stock decline.

All four brokerages dropped today. Morgan Stanley fell $1.23 to $64.88; Merrill fell $1.12 to $73.53; Lehman fell $1.01 to $58.49; and Goldman fell $2.80 to $187.79.

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