NEW YORK (AP) – Wall Street was narrowly mixed in early trading Tuesday, nervous about how the Federal Reserve might alter its stance on interest rates but relieved that the housing construction bounced back in February.

The Commerce Department report found construction of new homes and apartments rose by 9 percent last month to a seasonally adjusted annual rate of 1.525 million units, higher than the expected 1.450 million units. However, enthusiasm over the data was muted, as applications for building permits dropped.

The mixed housing data arrived as the Federal Reserve began its two-day meeting on interest rates. Investors are trading cautiously ahead of the central bank’s statement Wednesday, trying to determine if recent market tumbles and economic data will prompt the Fed to shift its posture on rates after several months of leaving them steady.

Stocks won some support from talk of possible acquisitions. An investment group said it is offering $5.93 billion in cash to take Affiliated Computer Services Inc. private, while speculation arose over media reports on several other deals, that cell phone manufacturer Nokia Corp. is trying to buy Palm Inc., that an investment firm is close to signing a deal to acquire Claire’s Stores, and that American International Group Inc. could be attempting to acquire Prudential PLC.

Ever-surging takeover activity has been a positive signal to investors that the economy isn’t weakening quickly enough to prevent companies from inking deals. A potential deal to unite Dutch bank ABN Amro Holding NV with British bank Barclays PLC helped lift the Dow Jones industrials more than 115 points on Monday.

In the first hour of trading, the Dow Jones industrial average fell 3.36, or 0.03 percent, to 12,222.81.

Broader stock indicators were also modestly higher. The Standard & Poor’s 500 index was up 0.27, or 0.02 percent, at 1,402.33, and the Nasdaq composite index rose 1.24, or 0.05 percent, to 2,395.65.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.54 percent from 4.57 percent late Monday, shrugging off the housing data and an announcement from China that the country doesn’t intend to build up its reserves.

Though worries over the big losses of subprime lenders, who make loans to people with poor credit ratings, continue to dog the markets, they were somewhat alleviated by news that subprime mortgage lender Accredited Home Lenders Holding Co. received a commitment for a $200 million term loan from Farallon Capital Management LLC, a San Francisco-based money manager.

Accredited Home rose $1.83, or 20 percent, to $10.78.

Declining issues narrowly edged out advancers on the New York Stock Exchange, where volume came to 191.43 million shares.

Overseas, Japan’s Nikkei stock average rose 0.90 percent. In afternoon trading, Britain’s FTSE 100 was down 0.28 percent, Germany’s DAX index was down 0.36 percent, and France’s CAC-40 was down 0.46 percent.

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