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U.S Stocks ended little changed Tuesday, a day after the major indexes had their worst day in two months. Traders are looking for the central bank at its two-day meeting ending Wednesday to outline its expectations for the economy and signal when it might raise interest rates.
Investors reacted coolly to a report from the National Association of Realtors that May sales of existing homes rose 2.4 percent. The increase was smaller than economists' forecast for 2.8 percent, and not enough to alleviate anxiety about reports later in the week on durable goods orders, new home sales and personal spending.
The Fed is widely expected to keep its key interest rate near zero, but investors are unsure how optimistic the policymakers will be in the economic assessment that accompanies their rate decision, and whether the central bank will consider raising rates later this year to curb inflation.
Analysts say the Fed might dismantle some of the emergency supports it has put in place for the economy, a move that could make investors nervous. At its meeting in March, the Fed introduced $1.2 trillion in spending that included the purchase of $300 billion in government debt to help drive down interest rates. Rates fell, but have since come off their lows, leaving traders divided about whether policymakers will change their strategy.
Meanwhile, the market was following the week's $104 billion in Treasury auctions. The government sold $40 billion in debt Tuesday amid strong demand. Investors have been on edge during such auctions because any signs that a desire for government debt is waning could hit the market.
Treasury demand needs to stay strong for the government to finance its bailout and stimulus programs without significantly raising yields. Bond yields also affect borrowing rates for consumers.
The stock market is showing no signs of restarting the rally that lifted the Standard & Poor's 500 index 32.3 percent since early March. Investors who three months ago were buying stocks on improved data like Tuesday's home sales report are now more dubious about when an economic recovery will actually take hold. The Dow Jones industrials shed 201 points on Monday.
The Dow fell 16.10, or 0.2 percent, Tuesday to 8,322.91. The Standard & Poor's 500 index rose 2.06, or 0.2 percent, to 895.10, and the Nasdaq composite index fell 1.27, or 0.1 percent, to 1,764.92.
The Dow has fallen for six out of the past seven days and closed at its lowest level since May 27.
The biggest loser among the 30 Dow stocks was Boeing Co., which fell $3.03, or 6.5 percent, to $43.87 after again delaying the first test flight of its long-awaited 787 jetliner. The company said it needed to reinforce part of the aircraft.
Falling stocks narrowly outnumbered those that rose on New York Stock Exchange, where consolidated volume came to 4.9 billion shares, down from 5.1 billion shares Monday.
The Russell 2000 index of smaller companies fell 3.04, or 0.6 percent, to 489.77.
After tumbling on Monday, the price of crude oil rose $1.74 to settle at $69.24 a barrel on the New York Mercantile Exchange.
The dollar was mixed against other major currencies. Gold prices rose.
Overseas, Britain's FTSE 100 fell 0.1 percent, Germany's DAX index rose 0.3 percent, and France's CAC-40 fell 0.2 percent. Japan's Nikkei stock average sank 2.8 percent.
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