Wall Street Mixed Ahead Of Fed Verdict

The US stock market lacked direction for much of the day after the S&P 500 and Dow Jones Industrial Average closed at record highs on Monday. Wall Street has recently benefited from optimism about a US$1.9 trillion fiscal stimulus package and ongoing vaccination drives that have bolstered views that the economy is on a path to recovery.

At the same time, fears about an overheating economy and a recent increase in interest rates have increased scrutiny on the Fed's two-day meeting, where policymakers are likely to raise economic forecasts and repeat their pledge to remain accommodative for the foreseeable future.

The Nasdaq ended higher. Apple Inc rose 1.3 percent after Evercore ISI hiked its price target on the iPhone maker's shares to the highest among analysts covering the company, according to Refinitiv data.

Wall Street's fear gauge hit a five-week low at 19.68 points. A midafternoon rise in the 10-year Treasury yield to 1.62 percent nipped some enthusiasm for high-growth stocks. The benchmark U.S. 10-year Treasury hit a 13-month high last week.

Investors have slightly increased their cash allocation, deeming that inflation and "taper tantrums" could topple the record rally in financial markets, BofA's March fund manager survey showed on Tuesday.

"This Fed meeting is one of the most important ones for the market in a long time. It is the first we have had after the recent inflation rate rise and concerns about inflation," said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.

Data showed retail sales dropped more than expected in February due to bitterly cold weather across the country. Another report indicated winter storms in Texas led to a plunge in U.S. factory output last month.

The Dow Jones Industrial Average fell 0.39 percent to end at 32,826 points, while the S&P 500 lost 0.16 percent to 3,963.

The Nasdaq Composite edged up 0.09 percent to 13,472.

After tumbling 11 percent from its February 12 record high through early March, the Nasdaq has mostly recovered and is now down about 4 percent from its all-time high close. (Reuters)