* FOMC begins two-day meeting on Tuesday
* McDonald's, Verizon fall on weak results
* Caterpillar, Texas Instruments rise on upbeat earnings, forecast
* Indexes: Dow down 0.2 pct, S&P down 0.5 pct, Nasdaq up 0.16 pct (Updates to early afternoon)
By Yashaswini Swamynathan
July 26 (Reuters) - U.S. stocks swung between small gains and losses on Tuesday afternoon as mixed earnings reports kept investors on the edge ahead of the Federal Reserve's two-day policy meeting and Apple's results.
A set of strong economic data, including Tuesday's housing report, could strengthen the case for the Fed to raise rates earlier than the market anticipates.
Traders have priced in an 18.7 percent chance of a rate increase in September and a 42.8 percent chance in December, according to CME Group's FedWatch tool.
"Investors have had the opportunity to drink from a fire hydrant of information," said Eric Wiegand, senior portfolio manager at the Private Client Reserve at U.S. Bank.
"But appetite is likely to increase when markets close today and after the Fed's comments on interest rates tomorrow."
Apple, which is expected to report a fall in third-quarter profit, was trading largely unchanged at $97.33.
At 13:02 p.m. ET, the Dow Jones Industrial Average was down 36.54 points, or 0.2 percent, at 18,456.52.
The S&P 500 was down 1.08 points, or 0.05 percent, at 2,167.4.
The Nasdaq Composite index was up 8.27 points, or 0.16 percent, at 5,105.90.
Five of the 10 major S&P sectors were lower, led by a 1.4 percent drop in the telecom services index. Verzion shares fell 2 percent after the company's subscriber numbers fell below estimates.
McDonald's dropped 4.3 percent to $121.89 after the restaurant chain's comparable sales missed analysts' expectations. The stock weighed the most on the Dow.
Gilead fell 8 percent after the drugmaker cut its full-year sales forecast, attracting a host of price target cuts.
Caterpillar's shares jumped 4 percent to touch a year high after the company's quarterly earnings beat expectations. The stock was the top gainer, boosting the Dow.
Texas Instruments rose 7.2 percent after its current-quarter forecast beat analysts' estimates. The stock provided the biggest boost to the S&P.
Advancing issues outnumbered decliners on the NYSE by 1,842 to 1,058. On the Nasdaq, 1,710 issues rose and 1,060.
The S&P 500 index showed 50 new 52-week highs and no new lows, while the Nasdaq recorded 100 new highs and 19 new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)