By Kristina Cooke (Reuters)

Stocks were little changed on Tuesday as investors kept to the sidelines before the Federal Reserve's interest-rate decision with opinion divided over the likely size of a cut.

In its last meeting of 2007, the Fed is widely expected to cut rates for a third straight time to fortify the economy against a credit crunch and housing slump that some economists fear could bring a recession.

The latest casualty of mortgage market turbulence was savings and loan Washington Mutual, whose stock fell after it said on Monday it would cut its dividend, eliminate thousands of jobs and raise $2.5 billion in new capital. WaMu, whose shares lost 6.2 percent to $18.65, said it sees losses from mortgages increasing in 2008.

Fed funds futures are signaling a quarter-percentage-point cut in the Fed's benchmark rate to 4.25 percent, with a 1-in-3 chance of a half-point reduction.

"There is a hesitancy in the market as investors are waiting to see if the Fed cuts 50 or 25 basis points," said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.

The Dow Jones industrial average was up 6.34 points, or 0.05 percent, at 13,733.37. The Standard & Poor's 500 Index was up 1.20 points, or 0.08 percent, at 1,517.16. The Nasdaq Composite Index was up 6.98 points, or 0.26 percent, at 2,725.93.

The Fed's Open Market Committee, meeting in Washington, is expected to announce its decision at 2:15 p.m.

AT&T Inc rose after the largest U.S. telephone company announced a stock-buyback program worth nearly $16 billion and its biggest-ever dividend increase. Its stock advanced 6.9 percent to $40.50 on the NYSE.

AT&T ranked as the Dow's biggest gainer.

But shares of Wyndham Worldwide dropped 8.7 percent to $27.93 on the NYSE after the No. 1 U.S. hotel company gave 2007 and 2008 earnings outlooks that were generally below Wall Street's expectations.