Wall St dips after S&P 500 hits record high; Fed meeting in focus

US stocks eased on Tuesday after the S&P 500 hit a record high earlier in the session, as investors awaited cues from the Federal Reserve about whether a recent jump in inflation would prompt a sooner-than-expected tapering in monetary policy.

Assurance from the Fed that rising prices, coupled with falling US Treasury yields, are transitory have helped ease some concerns over inflation with all eyes turning to the central bank's statement at the end of its two-day policy meeting on Wednesday.

The benchmark S&P 500, the blue-chip Dow Jones and the tech-stocks focused Nasdaq have gained 13.3%, 12.3% and 10%, respectively so far this year, largely driven by optimism about an economic reopening.

"If the Fed can convey to the market that they are going to continue to be patient and that they are not overly concerned about inflation, that continues to be a very solid set up for the equity markets," said Larry Adam, chief investment officer of Raymond James.

"The big thing that people are going to focus on are the new projections, particularly on inflation."

The Fed is likely to announce in August or September a strategy for reducing its massive bond buying program, but won't start cutting monthly purchases until early next year, a Reuters poll of economists found.

At 9:46 a.m. ET, the Dow Jones Industrial Average was down 76.35 points, or 0.22%, at 34,317.40, the S&P 500 was down 2.51 points, or 0.06%, at 4,252.64, and the Nasdaq Composite was down 14.68 points, or 0.10%, at 14,159.46.

In a new policy statement and economic projections due on Wednesday, the US central bank is expected to point to continued strength in the economy and acknowledge the first conversations among its policymakers about when and how fast to pare back the massive bond-buying program.

Nine of the 11 major S&P sectors slipped. Energy stocks added 1.4% as oil prices hit multi-year highs on positive demand outlook.

Latest data showed US retail sales fell more than expected in May, with spending rotating back to services from goods, as vaccinations allow Americans to travel and engage in other activities that had been restricted by the COVID-19 pandemic.

In corporate news, Biogen Inc dipped 0.1% after the drugmaker's potential therapy for choroideremia, an inherited disease that leads to vision loss, did not meet the main goal in a late-stage study.

Drug developer Ocugen jumped nearly 16.8% as it prepares for potential commercial manufacturing of the Covaxin for the US and Canadian markets.

Declining issues outnumbered advancers for a 1.21-to-1 ratio on the NYSE and for a 1.47-to-1 ratio on the Nasdaq.

The S&P index recorded 28 new 52-week highs and no new low, while the Nasdaq recorded 48 new highs and nine new lows.