NEW YORK (TheStreet) -- The S&P 500 and Dow Jones Industrial Average turned positive Tuesday as the latest economic data underscored the belief the Federal Reserve will leave monetary policy unchanged for a longer time period.

The S&P 500 was up 0.1% while the Dow gained 0.23%. The Nasdaq slid 0.38%.

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"There's a little bit of optimism that the Fed is going to recognize that the economy is still very much on uneven footing and continue to provide very accommodative policy with language that continues to reiterate their commitment," said Lindsey Piegza, Sterne Agee chief economist, in a call.

The Fed begins its two-day meeting Tuesday with an announcement due midafternoon on Wednesday. Fed-watchers anticipate the central bank will remove its longstanding pledge to keep interest rates at near zero for a "considerable time" in its announcement. Economists then expect the first interest rate hike as soon as the second quarter of 2015 after rates have sat for years at an artificially low level.

Among the weaker-than-expected data out this morning, U.S. housing starts for November slipped 1.6% to 1.03 million compared to an upwardly revised 1.7% increase in October. Economists had expected 1.04 million housing starts over the month. The Markit PMI manufacturing index slowed to a 11-month low of 53.7 in December. Though still signaling expansion, the reading was on par with January levels when extreme winter weather hit the economy hard.

Crude oil continued its downward spiral on Tuesday with West Texas Intermediate plunging 2% to $54.81. Prices skidded on Monday after key OPEC members recommitted to leaving production levels unchanged despite global oversupply.

China, the world's biggest oil importer, showed more economic weakness on Tuesday after the flash HSBC purchasing managers' index fell to 49.5, contracting for the first time in seven months.

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The Shanghai Composite spiked 2.3% with investors feeling confident the latest reading could push the government to further ease monetary policy. A day earlier, China's central bank said its economy could slow to 7.1% next year compared to a forecast 7.4% this year, a result of its flagging property sector.

Overnight, Russia's central bank enacted an emergency 650-basis-point interest rate hike to 17% after the ruble suffered its worst intraday fall since the Russian financial crisis of 1998.

"This is essentially a panic situation," Reorient Financial Markets' Uwe Parpart told CNBC. "The central bank took the most drastic action they could think of."

The ruble returned from fresh lows after First Deputy Gov. Sergei Shvetsov said the central bank could introduce more measures to bring stability to its domestic markets and foreign exchange. The ruble plunged more than 10% against the dollar on Tuesday. 

Talisman Energy (TLM) rocketed 48% higher after its board confirmed and recommended Repsol's (REPYY) plans to purchase it for $8.3 billion, or $8 a share.

Boeing (BA) - Get Boeing Company Report shares added 2.1% following a 25% dividend increase. The company also raised its repurchase authorization to $12 billion.

General Motors (GM) - Get General Motors Company (GM) Report fell 1% after RBC downgraded the stock to "sector perform" from "outperform" as analysts adopted a more cautious outlook on the automaker industry. Dollar Tree (DLTR) - Get Dollar Tree, Inc. Report tumbled 1.2% after Deutsche Bank downgraded to "hold" on a valuation call.

3M (MMM) - Get 3M Company Report shares popped more than 1% as the company raised its first-quarter dividend by 20% and reaffirmed its 2015 earnings guidance.

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--Written by Keris Alison Lahiff in New York.