The Dow Jones Industrial Average rose 9.85 points, or 0.04 percent, to 22,380.65, the S&P 500 lost 0.67 points, or 0.03 percent, to 2,505.98 and the Nasdaq Composite dropped 21.10 points, or 0.33 percent, to 6,440.23.
On the economic front, U.S. privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,180,000, beating market consensus, the Commerce Department reported on Tuesday.
The biggest USA telephone operators, Verizon VZ.N and AT&T T.N , rose more than 2 percent, providing the second- and third-biggest individual stock boosts for the S&P.
The Fed meeting is expected to produce details on how the central bank will release $4.2 trillion in debt and mortgage-backed securities portfolios, almost a decade after the global financial crisis.
The Fed also revealed that it will begin shrinking its USD4.5 trillion balance sheet in October, initially allowing USD10 billion in bonds to roll off each month. Zions Bancorporation climbed 70 cents, or 1.6 percent, to $45.11. Shares of smaller wireless carrier T-Mobile TMUS.O rose 5.9 percent and Sprint S.N jumped 6.8 percent, following a report they were in active merger talks.
The value of the USA dollar is likely going up - particularly if the FOMC raises rates in December and the US economy grows over four percent in the last quarter this year, he added.
The Standard & Poor's 500 index inched up 1.59 points, or 0.1 percent, to 2,508.24.
Tesla was down more than 2.3 percent after Jefferies started coverage of the electric vehicle maker's stock with "underperform". The Nasdaq Composite fell dipped 0.1% to 6456.04.
Wall Street rose to fresh record closes on Monday, boosted by gains in banking and financial stocks while investors eyed this week's meeting of the USA central bank in Washington. After leaving its benchmark rate at a record low for seven years after the 2008 crisis, the Fed has modestly raised the rate four times since December 2015 to a still-low range of 1 percent to 1.25 percent. The dollar rose to 112.38 yen from 111.50 yen on Tuesday. The euro strengthened to $1.1997 from $1.1953.
Benchmark U.S. crude added 93 cents, or 1.9 percent, to settle at $50.41 a barrel on the New York Mercantile Exchange. Brent crude, used to price worldwide oils, gained 14 cents to $56.15 a barrel in London. JPMorgan Chase (JPM) advanced 1.2% and Goldman Sachs (GS) increased 1% to be among the top gainers on the Dow.
Advancing issues outnumbered decliners on the NYSE by 1,539 to 907. The FTSE 100 index of leading British shares gained 0.3 percent. Meanwhile, South Korea's Kospi and the Australian S&P/ASX 200 were down 0.2%. Hong Kong's Hang Seng fell almost 0.4 percent.