Wall Street ends slightly lower on day before Fed statement

Investors reluctant to make big bets before the results of Fed meet

US stocks closed slightly lower on Tuesday, with investors reluctant to make big bets before the results of a Federal Reserve meeting that could give some clarity as to when the central bank will begin trimming its stimulus.

The policy-setting Federal Open Market Committee is expected to issue a statement on Wednesday at the meeting's conclusion. While the Fed isn't expected to start winding down its purchases of $85 billion a month in bonds until March, recent stronger-than-expected economic data increased the odds that tapering could occur sooner.

The Fed has said it would begin to slow the program when certain economic indicators meet its targets. Some market participants believe that the US central bank will upgrade its economic forecasts in the meeting.

"The most recent data has pulled forward expectations on when tapering could start," said Hayes Miller, who helps oversee about $57 billion as head of asset allocation in North America at Baring Asset Management in Boston. "We think the Fed will err on the side of caution, but everyone is taking a wait-and-see attitude."

The CBOE Volatility Index or VIX, a measure of investor anxiety, rose 1.1% to close at 16.21, its highest level since mid-October.

The Dow Jones industrial average slipped 9.31 points, or 0.06%, to close at 15,875.26. The Standard & Poor's 500 Index declined 5.54 points, or 0.31%, to finish at 1,781.00. The Nasdaq Composite Index fell 5.84 points, or 0.14%, to end at 4,023.68.

Stocks fluctuated between losses and break-even levels throughout Tuesday's session, briefly dipping to session lows after a two-year US budget deal cleared a Senate procedural vote that all but assured its passage by the Senate as early as Wednesday. The gridlock that led to a partial government shutdown in October was considered a reason for the Fed to hold off on tapering.

US consumer prices were flat in November, but a bounce back in the annual inflation rate from a four-year low will probably give the Fed some room to start the tapering. Separate data showed the US current account deficit was the smallest in four years in the third quarter as exports increased and more income was earned abroad.

In corporate news, shares of specialty finance company KKR Financial Holdings surged 30.6% to $12.34 a day after KKR & Co said it would acquire the company for $2.6 billion. KKR slid 1.2% to $24.79.

Facebook rose 2% to $54.86 after the Wall Street Journal reported that the social network would begin selling video ads later this week.

Shares of 3M climbed 2.9% to $131.39 after the Dow component affirmed its outlook and raised its dividend.

Boeing's board raised the company's dividend about 50% on Monday and approved $10 billion in new stock-buyback authority that the company said it would use in the next two to three years. Boeing's stock gained 0.9% to $135.88.

AT&T said it would sell its wireline operations in Connecticut to Frontier Communications for $2 billion in cash, partly to fund the expansion of its 4G network. Frontier's stock jumped 8.6% to $4.78 and ranked as the S&P 500's biggest%age gainer. AT&T fell 0.9% to end at $33.85.

Jabil Circuit fell 4.8% to $18.72 in extended-hours trading after the company reported its second-quarter results. The stock had ended regular trading at $19.72, up 0.2%.

About 52% of the shares traded on both the New York Stock Exchange and the Nasdaq closed lower.

About 5.06 billion shares traded on all US platforms, according to BATS exchange data.