The Dow Jones Industrial Average gained seven points, or 0.1%, to 15891 in early trade, with 14 of its 30 components climbing.
The S&P 500 slipped two points, or 0.1%, to 1784, and the Nasdaq Composite Index dropped six points, or 0.1%, to 4024. On Monday, the S&P 500 rose 0.6%, to snap a four-session losing streak, while the Dow gained 0.8%.
The Fed will begin debating the future of its $85 billion-a-month bond-buying plan, which has buoyed stock markets this year, with a decision due after the meeting concludes on Wednesday. The S&P 500 index is up 25% this year through Monday’s close.
After a 1.6% drop last week, the biggest weekly decline since the last week of August, stocks are rising as some bullish investors come back into the market, said Uri Landesman, president of the $1.25 billion hedge fund Platinum Partners.
Still, Mr. Landesman said, “It is the last gasp, or nearly last gasp of this huge rally.” He sees stocks falling through the first half of next year, for the most substantial market correction since stocks began recovering from the financial crisis five year ago.
“More important than when tapering begins is the slope of tapering,” Mr. Landesman said. “Will we go from $85 billion to zero over six months, or over 18 months?” he said.
On the economic calendar, the consumer price index for November was unchanged versus expectations for a rise of 0.1% on the month. Excluding food and energy, the index gained 0.2%, slightly more than expected. The National Association of Home Builders’ housing market index for December, due out at 10 a.m. EST, is seen increasing to 55 from 54 in November.
The yield on the 10-year Treasury dropped to 2.876% from 2.880% late Monday.
January crude-oil futures rose 0.1% to $97.58 a barrel. December gold futures slipped 1.1% to $1,232 an ounce. The dollar fell against the yen, but gained against the euro.
European stocks slipped Tuesday, trimming the previous session’s gains. Investors turned cautious heading into the Fed meeting, which could bring an announcement on the scaling back of U.S. monetary stimulus.
The Stoxx 600 index slipped 0.3%, after gaining 1.3% in the previous session. Germany’s DAX shed 0.2%, while London’sFTSE 100 lost 0.3%. The losses came despite a positive lead from the U.S. and Asia, and data showing that German economic sentiment is at its most robust level since April 2006.
The ZEW sentiment survey showed the economic expectations indicator rose to 62 points in December from 54.6 points in November, beating economists’ expectations of an increase to 55 points.
Asian markets were higher, taking their lead from strong overnight gains in the U.S. Japan’s Nikkei Stock Average rose 0.8%, while South Korea’s Kospi gained 0.2% and Australia’s S&P/ASX 200 added 0.3%. But China’s Shanghai Composite slipped 0.5%.
In corporate news, Boeing shares gained after its board authorized a 50% increase to its regular dividend and $10 billion to repurchase its shares over the next two-to-three.
KKR slipped after the private-equity firm known for its large debt-fueled corporate takeovers said it reached a deal to acquire KKR Financial, bringing under its roof the separate, specialty-finance company managed by the private-equity firm that pursues debt investments and other bets. KKR signed an agreement to take over the sister firm in a $2.6 billion all-stock deal. Shares of KKR Financial jumped.
3M jumped after raising its quarterly dividend by 35%, as the maker of Scotch tape, Nexcare bandages and Post-it Notes continued its effort to consistently boost its payouts to shareholders. Dividends have increased annually in each of the past 55 years.
AT&T dropped after the company agreed to sell its wireline business and statewide fiber network in Connecticut to Frontier Communications for $2 billion as the telecommunications giant continues to focus more on its wireless business. Frontier shares surged.