US STOCKS-Market flat before Fed minutes, earnings

(Updates to early afternoon)

By Caroline Valetkevitch

NEW YORK, Oct 9 (Reuters) - U.S. stocks were little changed on Tuesday as optimism that quarterly results would beat expectations was offset by caution before the release of minutes from the Federal Reserve's last meeting.

Investors are hoping the minutes from the Sept. 18 gathering, which will be released at 2 p.m. (1800 GMT), will provide clues on whether more Fed interest rate cuts might be coming.

Also helping to limit gains were financial stocks, which lost ground following a forecast of bigger-than-expected mortgage losses by lender Thornburg Mortgage Inc TMA.N. Citigroup Inc (C.N), the largest U.S. bank, dropped 1.9 percent to $46.89, while Thornburg shares fell 10.5 percent to $12.05.

Alcoa Inc (AA.N), the aluminum company and Dow component, was to start off the earnings reporting period by announcing results shortly after the market closes. Shares of Alcoa rose 1.6 percent to $38.90.

"To some degree, today was expected to be a pause. You've got the minutes coming out from the Fed and people are wondering what's going to happen" with earnings, said Rick Campagna, portfolio manager at Provident Investment Council in Pasadena, California. "The estimates (on earnings) look too low. I think they'll be better than that."

The Dow Jones industrial average .DJI was down 4.30 points, or 0.03 percent, at 14,039.43. The Standard & Poor's 500 Index .SPX was down 0.12 point, or 0.01 percent, at 1,552.46. The Nasdaq Composite Index .IXIC was down 1.10 points, or 0.04 percent, at 2,786.27

According to Reuters Estimates, S&P 500 third-quarter earnings are currently projected to rise 3.2 percent compared with a year ago. The health-care and technology sectors are expected to show the largest gains.

News that restaurant operator Yum Brands Inc (YUM.N) was raising its profit forecast also fed the appetite for stocks. Its shares rose 5 percent to $38.10 and earlier hit a record high.

Shares of Microsoft Corp (MSFT.O) gained 1.1 percent to $30.23 after Goldman Sachs raised its 2008 profit targets for the software maker.

Last week, the Dow industrials and S&P 500 index hit records on optimism about the economy and profits. (Additional reporting by Ellis Mnyandu)