The markets opened lower as investors wondered if a rate cut by the Federal Reserve Bank this week could end the housing slump and stabilize the economy. Meanwhile, U.S. home prices fell in August for the eighth month in a row. The Dow lost 35 points to 13,834 while Nasdaq slipped 3 points to 2814.

On the upside

Franklin Electric (Nasdaq: FELE) posted earnings that beat estimates due to improving margins for its water systems and a reduction in inventory despite the slowing housing market.

Sepracor (Nasdaq: SEPR) posted lower profits that beat estimates while announcing plans to submit three new applications to the FDA during the 4th quarter.

An analyst upgraded FormFactor (Nasdaq: FORM) citing a strong 2008 outlook for the maker of equipment that tests semiconductors.

On the downside

Merrill Lynch (NYSE: ML) announced that Stan O' Neal, its embattled CEO, will retire effective immediately.

Procter & Gamble (NYSE: PG) posted higher 2nd quarter profits, but rising commodity and energy costs cut into margins.

American Medical Systems Holdings (Nasdaq: AMMD) posted 3rd quarter profit and revenues that missed expectations.

In the broad market, declining issues outpaced advancers by a margin of nearly 2 to 1 on the NYSE and by a margin of 5 to 3 on Nasdaq. The Russell 2000 which tracks small cap stocks slipped a point to 819.