NEW YORK (TheStreet) -- Stocks reversed earlier losses to shoot higher on Tuesday morning as Federal Reserve members convened for a two-day meeting. 

The S&P 500 added 0.13%, the Dow Jones Industrial Average gained 0.23%, and the Nasdaq added 0.06%. The Volatility IndexI:VIX, or "fear" index, was slightly higher at 15.44. 

The Fed will release a statement Wednesday afternoon and a press conference will follow. Economists do not expect the Fed to raise interest rates until September at the earliest.

"Activity is not yet strong enough to give the Fed 'reasonable confidence' that progress in the labor market will continue," said SG Global Economics' Michala Marcussen. "Therefore, we do not expect any signals regarding the timing of the lift-off in rates."

U.S. housing starts in May fell 11.1% to an annual rate of 1.04 million from a revised 1.17 million in April, which was the highest since November 2007. Permits for future construction were a bright spot, though, jumping 11.8% to a 1.28 million unit rate. That was its highest point since August 2007. 

"Housing remains an area of focus for many and rightfully so," said Dan Greenhaus, chief strategist at BTIG Research. "While the May starts data was a bit of a disappointment, the permit data was much stronger than expected suggesting starts should continue to improve in coming months, supporting job creation and the broader economy."

European markets extended Monday's losses ahead of Greece and its European creditors' final round of negotiations on Thursday. Eurozone finance ministers are pushing Greece to introduce a round of austerity measures in exchange for further debt relief.

A compromise is looking unlikely, though, as Greek Finance Minister Yanis Varoufakis told a German newspaper that Athens would not be putting forth any new concessions. Greece has until the end of the month to repay its debts to the International Monetary Fund.

Gap (GPS) - Get Report shares added 0.6% on Tuesday after the retailer announced it will shut 175 of its namesake locations in North America over the next few years. The company has faced weakening demand at its North American stores. Gap will also cut 250 corporate jobs at its headquarters.

Coty (COTY) - Get Report shares surged more than 16% after the cosmetics company acquired three beauty lines from Procter & Gamble (PG) - Get Report, according to the New York Post. The company reportedly purchased Procter's Max Factor, CoverGirl and Wella brands for as much as $12 billion.

Avalanche Biotechnologies (AAVL) plummeted 51% after announcing the results of top-line results from a Phase 2a study for its leading experimental product AVA-101. The treatment for wet age-related macular degeneration disappointed on one of its assessment criteria.

There were more signs of consolidation in the heath care sector as UnitedHealth (UNH) - Get Report reportedly approached Aetna (AET) about a takeover deal worth more than $40 billion, according to The Wall Street Journal. Health insurance company Cigna (CI) - Get Report was reportedly approached by Anthem (ANTM) - Get Report with a bid, according to reports on Monday.

Twitter (TWTR) - Get Report shares fell almost 3% after the stock was downgraded to neutral from buy with a target price of $39 at MKM Partners.