NEW YORK CITY, RAW – The S&P 500 has ended lower on Tuesday as investors awaited the result of the Federal Reserve’s two-day policy meeting.

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 in the prior session as optimism about a $US1.9 trillion ($A2.5 trillion) fiscal stimulus package and ongoing vaccination drives bolstered views that the economy was 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.

Apple Inc rose 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 per cent nipped some enthusiasm for high-growth stocks. The benchmark US 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 US factory output last month.

Unofficially, the Dow Jones Industrial Average fell 128.3 points, or 0.39 per cent, to 32,825.16, the S&P 500 lost 6.37 points, or 0.16 per cent, to 3,962.57 and the Nasdaq Composite added 11.86 points, or 0.09 per cent, to 13,471.57.

The S&P 500 energy index tumbled after a drop in oil prices while financials and industrials also retreated. The communication services and technology indexes both rose.

The Russell growth index rose, while the Russell value index fell in a slight reversal of a recent trend away from technology and other high-growth stocks.

Ford Motor Co dropped after announcing a $US2 billion ($A2.6 billion) convertible debt deal.