U.S. stocks fell slightly on Tuesday with the S&P 500 and the Nasdaq Composite slipping from their respective records, as investors awaited the key Federal Reserve monetary policy meeting.
The S&P 500 dipped 0.2% to 4,246.59 after rising 0.1% to reach a new all-time high of 4,257.16 earlier in the session. The Dow Jones Industrial Average fell 94.42 points, or about 0.3%, to 34,299.33. The Nasdaq Composite, which hit a record closing high in the previous session, pulled back 0.7% to 14,072.86 as Apple, Alphabet, Amazon and Microsoft all registered losses.
Real estate and tech were the biggest laggards on Tuesday, while the energy sector provided the broader market with some support, rising 2.1%. Diamondback Energy jumped 5.1%, and Exxon Mobil and Occidental Petroleum climbed more than 3% each.
On the data front, the final demand index for producer prices advanced 6.6% for the 12 months ended in May, the largest increase since 12-month data were first calculated in November 2010.
On a monthly basis, the producer price index for final demand rose 0.8%, ahead of the Dow Jones estimate of 0.6%.
Meanwhile, May's retail sales data fell 1.3%, compared to an expectation of a 0.7% decline per economists polled by Dow Jones.
"The mixed data hasn't raised any eyebrows in the market," said Fiona Cincotta, senior financial markets analyst at City Index. "The market has barely responded with few brave enough to take big positions ahead of tomorrow's Fed announcement. The big question is whether the Fed will start, very slowly, introducing taper talk and the debate surrounding reining in ultra-lose monetary policy."
The Fed's two-day policy meeting started on Tuesday, and it's a focal point for the markets this week. The central bank is not expected to take any action. However, commentary on interest rates, inflation and the economy could drive market moves.
Traders will listen closely for comments on inflation and the Fed's eventual tapering plans.
"The longer they wait to talk, let alone launch taper, imbalances grow," said George Goncalves, head of U.S. macro strategy at MUFG. "Taper risks plus recent high inflation data and issues around RRP/IOER rate will likely make this the last meeting the Fed can be dovish."
Billionaire hedge fund manager Paul Tudor Jones told CNBC on Monday that this Fed meeting could be the most important in Chairman Jerome Powell's career. Tudor Jones also warned that Powell could spark a big sell-off in risk assets if he doesn't do a good job of signaling a taper in the Fed's monthly asset buying.
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