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%.
"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.