Economic data will continue to be scrutinized as investors try to determine what the awareness of the Federal Reserve is regarding the economy. Investors are angling for a half-point cut following its emergency three-quarter-point cut last week.

The Fed's coming up rate decision is obviously the market's focus this week, so trading will be marked by investors' conjectures about policymakers' thoughts on the weak economy. With a decision not expected until Wednesday afternoon, the market in the meantime digested Tuesday's data on earnings, consumer spending and durable goods.

In midmorning trading, the Dow Jones industrial average rose 49.27, or 0.40 %, to 12,433.16.

Broader indexes were mixed. The Standard & Poor's 500 index rose 3.86, or 0.29 %, to 1,357.82, and the Nasdaq composite slipped 3.37, or 0.14 %, to 2,346.54.

The dollar was mixed against most major currencies except the yen, and gold prices rose.

Oil prices moved higher as traders waited to see what the Fed's next move will be. A barrel of light sweet crude fell 11 cents to $90.88 a barrel on the NYMEX.

The Russell 2000 index of smaller companies fell 3.34, or 0.48 %, to 699.05.

In Asian trading, Tokyo's Nikkei stock average rose 2.99 %; Shanghai's key index rose 0.87 %; and Hong Kong's main index rose 0.99 %. In European trading, London's FTSE rose 1.30 %; Frankfurt's DAX rose 1.31 %; and Paris' CAC rose 1.83 %.

A shock three-quarters of a percentage point reduction.  Analyst Jeremy Stretch of Rabobank, described the Fed's move as "a sign of panic".

The US Federal Reserve has cut interest rates to 3.5%. A day after global markets sank due to worries of a possible U.S. recession, the Federal Reserve Bank decided to reduce the risk of further economic problems by a three-quarter point cut interest rate before U.S. markets opened.

Investors collected profits after nearly three sessions of big gains, unwilling to leave money on the table amid ongoing economic uncertainty.

The chart below shows how the market reacted to the FED's rate cut.

It is interesting to note that immediately after the FED's decision, the Dow Jones Industrial index was pushed up by speculative movements. In one hour it had gained 220 points, passing from 12,461 points to 12,681.

Then it firmly pulled back, with traders awaiting key reports on the job market and manufacturing set to arrive on Friday. The Dow, which had been up more than 200 points after the Fed's decision, closed down 0.30%, at 12,442.83.

Investors' concerns about the state of the economy have not let up yet. 

Making an accurate forecast on where the market will move in the next days is not an easy task. Last week we have assisted to a low volume trading, with undefined movements and uncertainty. We can address this moment as "the quiet after the storm", where investors wait for a more defined sign before making the next move.

Has the storm really gone away? US seems more solid, especially financials, FED is working hard to establish a tighter control over them and lighter winds are blowing on Wall Street. The S&P500 has power to move up and limit its downside movement. Commodities are weaker today while equity indexes have shown an impressive strength to recover from their lows. Is it possible that money flows have been redirected back from commodities to equity? Companies are publishing their results and this could be a good opportunity to buy undervalued stocks.