U.S. stocks fell for a sixth session in seven on Tuesday, after another day of gyrations as equities tracked the price of oil and pondered the impact of lower energy costs and Russia's economic troubles on policy decisions by the Federal Reserve.
Wall Street hears from the Fed on Wednesday, with the central bank gathering to consider the timing and size of interest-rate hikes and whether to reiterate its vow to maintain rates low for a considerable period.
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"It's becoming clearer and clearer to them that they are way behind schedule. Every central bank wants to engineer a soft landing, but we're at 30,000 feet and a mile away from the runway," said David Kelly, chief market strategist at J.P. Morgan Funds.
"Whatever they do, it will likely take a backseat to global events and the sharp demand for long-dated Treasuries from safe-haven players and foreign central banks around the world. You can thank, in part, oil," noted Kevin Giddis, head of fixed income capital Markets at Raymond James.
After falling to lows not seen since the spring of 2009, crude futures for January delivery on Tuesday fell to a low of $53.60 a barrel, then shoot up $1.24 to a high of $57.15 a barrel, and closed at $55.93, up two cents and halting a four-day loss streak.
"Two or three days of sideways or up moves would be received positively by the markets. We need some stabilization," said Randy Frederick, managing director of trading and derivatives.
New-home construction in the U.S. topped a million on an annualized rate in November, while housing starts fell 1.6 percent and building permits declined 5.2 percent last month.
An industry report on Tuesday had the U.S. manufacturing sector continuing to expand in December but its growth rate at an 11-year low.
Equities around the globe had declined as Russia vowed further action to stabilize its markets after an unexpected interest-rate hike and a measure of factory activity in China dropped to a seven-month low in December.
"I don't see much trouble here in the U.S., we'll likely continue to be a safe haven. Retailers are now expecting a strong holiday-selling season; there are positives to people driving around and seeing $2.60 (a gallon) gasoline," said Jack Ablin, chief investment officer at BMO Private Bank.
"The main concern I heard overnight was that Russia was printing, and if Russia is printing to cover bank debt or energy-company debt, the question is, what's the true value of the ruble?" Ablin asked.
The CBOE Volatility Index, a measure of investor uncertainty, rose more than 15 percent to 23.57.
Read MoreFed, oil and Russia: A volatile mix
After a 246-point rally, the Dow Jones Industrial Average dropped 111.97 points, or 0.7 percent, to 17,068.87.
Boeing led blue-chip gains that included seven of 30 components after the plane manufacturer said it would hike its quarterly dividend 25 percent.
The shed 16.89 points, or 0.9 percent, to 1,972.74, with consumer discretionary falling the most and energy the best performing of its 10 major sectors.
The Nasdaq declined 57.32 points, or 1.2 percent, to 4,547.83.
For every two stocks rising, roughly three fell on the New York Stock Exchange, where more than a billion shares traded. Composite volume approached 5 billion.
The U.S. dollar declined against the currencies of major U.S. trading partners and the yield on the 10-year Treasury note used to figure mortgage rates and other consumer loans fell 7 basis points to 2.0540 percent.
Gold futures for February turned lower, off $13.40, or 1.1 percent, to $1,194.30 an ounce.
On Monday, U.S. stocks finished lower, topping off a wild ride that had the Dow Jones Industrial Average trading in a more than 300-point range on either side of neutral as investors monitored the price of oil.
"In the U.S., the Santa Claus rally that everyone knew was coming has turned into the Ebenezer Scrooge pullback," Nick Raich, CEO at the Earnings Scout wrote in emailed commentary.
"I'd love to see a Santa Claus rally but I just don't know if it's on the docket this year. Santa may be substituting coal for oil," said Ablin.
Coming Up This Week:
FOMC meeting begins
Second day FOMC meeting
7:00 a.m.: Mortgage applications
8:30 a.m.: CPI
8:30 a.m.: Current account
10:30 a.m.: Oil inventories
2:00 p.m.: Fed statement and projections
2:30 p.m.: Fed Chair Janet Yellen press conference
Earnings: Nike, Red Hat, Winnebago, Sanderson Farms, Accenture, Pier 1 Imports, Rite Aid
8:30 a.m.: Weekly claims
10:00 a.m.: Philadelphia Fed survey
10:00 a.m.: Leading indicators
10:30 a.m.: Natural gas inventories
Earnings: Blackberry, CarMax, Finish Line
10:00 a.m.: Chicago Fed President Charles Evans
12:30 p.m.: Richmond Fed President Jeffrey Lacker
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