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U.S. index futures traded in a tight range overnight Monday and are slightly higher in pre-market trading Tuesday as traders await the results of the Fed's policy meeting, due at 2:15 p.m.

S&P 500 futures were +2.5 to 1521.25; Nasdaq futures were +6.25 to 2144.75; and Dow futures were +25 points to 13776 as of 8:00 a.m.

It is widely assumed that the Fed will cut rates at least 0.25% to 4.25%. Investors will focus on whether it will take the bolder step of a 0.5% cut, and how the wording of its statement will differ from its previous Oct. 31 outlook. "Consumer confidence has fallen sharply over recent months, as rising gas prices and falling house prices have led to a deterioration in the financial situation of private households," said Credit Suisse's Marcel Thieliant. "The tensions in the money markets have once again increased, and the banks have already reacted in the form of restricted credit lending. We are therefore expecting two further rate cuts next year." Thieliant expects a quarter-point cut today.

Stocks in focus include Washington Mutual (WM), which fell almost 10% in Frankfurt after saying it was leaving subprime lending, cutting 3,150 jobs, slashing its dividend by two thirds, and selling $2.5 billion in convertible preferred stocks. Texas Instruments (TXN) surged nearly 6% in extended trading after it boosted the lower end of its earnings estimate (full story). Rival STMicro (STM) announced it will buy video-chip maker Genesis Microchip (GNSS) for $336 million (full story), and Lam Research (LRCX) announced it will buy wet clean developer SEZ for $568 million (full story).

MBIA (MBI) told investors it sees further writedowns, but tempered the news with the announcement of a $1B cash infusion from Warburg Pincus (full story). Bank of America (BAC) said it was shuttering a $33 billion enhanced cash fund after subprime losses scared investors (full story).

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Source: Futures Edge Higher Ahead of Fed Day