By Marina Force

U.S. stocks edged slightly higher Tuesday, with investors expected to avoid taking major positions ahead of the Federal Reserve policy meeting later this week.

The Dow Jones Industrial Average added 22 points, or 0.1%, to 22354 and the S&P 500 gained less than 0.1% after both closed at a record Monday. The Nasdaq Composite climbed 0.1%.

The Stoxx Europe 600 was flat, with the biggest losses in the food and beverage sector, while Asia markets closed mixed, with Japan's Nikkei Stock Average shares moving higher after Monday's public holiday.

Investors are turning their attention this week to the Fed's interest rate decision. The central bank is likely to announce Wednesday plans for unwinding its $4.5 trillion balance sheet, while economists expect rates to remain unchanged.

"It's not rare to see the markets in a pause mode just before an important meeting," said Patrick Zweifel, chief economist at Pictet Asset Management.

Investors will be closely looking at the Fed's inflation forecasts for next year, Mr. Zweifel said, "because monetary policy decisions are mostly taken on where Fed members think inflation will be in one year time, not on where it is right now."

Subdued inflation readings have largely underpinned skepticism of another Fed rate increase this year.

"The data that has been coming out from the U.S. has been a bit of a mixed bag...so I think it is maybe time for the Fed to take a break," said Trip Miller, managing partner at Gullane Capital Partners, who doubts the central bank will increase rates again this year.

However, better-than-expected U.S. consumer prices last Thursday gave a fresh boost to investor expectations for one more rate rise in 2017. Traders now see a 58% chance of a rate increase by year-end, from 41% last week, according to Fed-fund futures tracked by CME Group.

Among biggest decliners in the pan-European index, shares of Heineken slumped 3.5% after Mexico's Femsa said late Monday it is selling a 5.24% stake in the Dutch brewer.

In the bond market, prices have pulled back in recent sessions as concerns among investors over North Korea and hurricanes in the Atlantic Ocean dissipated, at least for now.

Yet, the 10-year Treasury yield on Tuesday edged down to 2.214% according to Tradeweb, compared with Monday's close of 2.230%. Meanwhile, the 10-year German government bond yield was lower at 0.438%, from 0.459% Monday. Portugal's bond yield also continued to fall after the country recently regained its investment grade rating, to trade at 2.397% from 2.459% Monday. Yields fall when prices rise.

The dollar pared some of its Monday gains. The WSJ Dollar Index, which measures the greenback against a basket of other currencies, fell 0.1%. The euro rose 0.2% against the dollar to trade at $1.1973.

Elsewhere in the currency market, the swiss franc fell 0.3% against the euro Tuesday, reaching its lowest point since 2015, when Switzerland's central bank removed the cap it had been using to control the franc.

In Asia, markets closed mixed, with commodities, currencies and a number of Asian stock indexes moving back and forth across Monday's settlement levels, failing to find direction.

Japan's Nikkei Stock Average was the exception, gaining nearly 2% after a public holiday Monday. Game maker Nintendo jumped more than 7%, hitting fresh nine-year highs.

Elsewhere, South Korea's Kospi and the Australian S&P/ASX 200 closed down 0.1%, while Hong Kong's Hang Seng Index finished down 0.4%.

In the commodity markets, U.S. crude gained 0.5% to trade at $50.62 a barrel.

Kenan Machado contributed to this article.

(END) Dow Jones Newswires

September 19, 2017 09:55 ET (13:55 GMT)

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