The Dow Jones Industrial Average fell 151.91 points, or 0.50 percent, to 30,364.83. The S&P 500 lost 14.15 points, or 0.38 percent, to 3,735.48. The Nasdaq Composite Index was up 19.12 points, or 0.18 percent, to 10,828.35.
Nine of the 11 primary S&P 500 sectors ended in red, with utilities and consumer staples down 2.58 percent and 1.29 percent, respectively, leading the laggards. Technology and energy rose 0.62 percent and 0.07 percent, respectively, the only two gaining groups.
On Monday, Wall Street suffered a major setback, which saw the S&P 500 tumble 3.9 percent and end in bear market territory, amid fears that stubborn inflation will force central banks to tighten more aggressively. A bear market is commonly defined by a fall of at least 20 percent from a recent peak.
Investors are looking to the Fed as the U.S. central bank started its two-day policy meeting on Tuesday with a rate decision on Wednesday.
In May, the Fed raised rates by 50 basis points, the sharpest increase since 2000, in an effort to rein in inflation.
Friday's data showing an unexpected reacceleration in U.S. inflation raised concerns that the Fed may have to take greater measures to tackle it, which could tip the economy into recession.
According to the CME Group's Fedwatch tool, investors are betting a more than 90 percent probability of a 75-basis-point rate hike at the Fed's meeting this week, up from 13.6 percent a month ago.
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