Stocks recover as banks rise, oil cuts losses

A report on a potential takeover of computer maker Sun Microsystems supported the technology sector, lifting the Nasdaq to a session high in early afternoon.

Investors now focused on the outcome of the U.S. central bank's policy meeting, which will yield a statement at around 2:15 p.m. EDT.

With the Fed already having cut interest rates close to zero, attention is on whether the bank would commit itself to buying long-dated government debt as an additional measure to revive the economy.

The Dow Jones industrial average was down 58.86 points, or 0.80 percent, at 7,336.84. The Standard & Poor's 500 Index was down 1.42 points, or 0.18 percent, at 776.70. The Nasdaq Composite Index was up 6.55 points, or 0.45 percent, at 1,468.66.

(Reporting by Ellis Mnyandu; Editing by Jan Paschal)