Stocks rose slightly on Tuesday, but gains were capped as the Federal Reserve kicked off a two-day monetary policy meeting.
Real-estate stocks were the best performers as Treasury yields dipped. The sector rose 1.4% while the benchmark 10-year yield fell to around 1.8%.
The meeting is scheduled to end Wednesday, when the central bank is expected to announce its latest decision on monetary policy. The Fed is largely expected to cut rates by 25 basis points. That would be the central bank's second rate cut of 2019.
"The drama is centered on just how strongly the Fed will signal that it's going to cut rates again by the end of 2019," Tom Essaye, founder of The Sevens Report, said in a note. "It'll be the 'dots' and statement that determine whether the Fed meets market expectations (and spurs a short-term rally) or if we see another 'hawkish' cut and uptick in volatility."
Bank stocks fell broadly. The SPDR S&P Bank ETF (KBE) dropped 1.1% as Citigroup, J.P. Morgan Chase and Bank of America all slid at least 0.5%. Regional banks also pulled back. The SPDR S&P Regional Banking ETF (KRE) slipped 1.3%.
The dots refer to the Fed's projection of the overnight rate, which is also set for release Wednesday.
Wall Street ended lower on Monday amid ongoing fears over a potential increase in oil prices, after drone strikes in Saudi Arabia. U.S. President Trump said he is not in a rush to respond to the attacks. Monday's decline snapped an eight-day winning streak for the Dow.
U.S. crude futures skyrocketed more than 14% on Monday, their biggest one-day gain since December 2008, after the attacks. Energy stocks got a boost from the higher oil prices, with the sector gaining 3.41%. Crude plunged more than 5% on Tuesday after the Saudi energy minister said the country's oil supply will be back online by the end of the month.
The major indexes were within striking distance of their record highs. The Dow and S&P 500 were about 1% below all-time highs set in July while the Nasdaq was 2.1% below its record mark.
"We're right near that resistance level on the S&P 500," said Sandy Villere, partner at Villere & Co. "We're waiting for the markets to come back down a bit. Then we can buy some of the growthier names that have been beaten up over the last few days."
Value stocks have outperformed their growth counterparts this month, rising 6.7% through Tuesday's close. Growth stocks, meanwhile, are down 0.4%. This is a reversal from an overarching trend seen over the past few years.
The iShares Edge MSCI Value Factor ETF (VLUE) is up about 30% over the past five years. The iShares Edge MSCI Momentum Factor ETF (MTUM) has surged over 80% in that time.
Stocks briefly jumped after President Donald Trump said a U.S.-China trade deal could come soon.
Trump told reporters that China was buying U.S. farm products in a "big league" way, noting a deal could come before the 2020 election or a day after. Both countries have been engaged in a trade war since last year. The two sides are expected to hold negotiations next month.
Peter Cardillo, chief market economist at Spartan Capital Securities, said China's economy is showing signs of "cracking," noting this could lead to a "relaxation" of some tariffs by the Chinese.
—CNBC's Silvia Amaro contributed to this report.