By Marina Force and Michael Wursthorn

U.S. stocks inched higher Tuesday, as investors braced for the Federal Reserve's policy decision this week.

The Dow Jones Industrial Average gained 43 points, or 0.2%, to 22374 in recent trading. The S&P 500 added 0.1%, while the Nasdaq Composite rose 0.2%.

Major U.S. indexes have mostly drifted higher in recent trading sessions, with the S&P 500 and Dow industrials rising to fresh records together Monday.

Some analysts attributed the lull in the stock market to investors holding off on bets ahead of the Fed's upcoming policy announcement. Many expect the central bank to announce Wednesday that it will keep rates unchanged and that it will start slowly unwinding its $4.5 trillion balance sheet.

"It's a really quiet market. People are in a wait-and-see mode ahead of the Fed meeting," said Bret Chesney, a senior portfolio manager at Alpine Global Management. "With the things I'm trading today, just nodding at the stock moves prices."

Still, any messaging from the Fed that departs from investors' expectations could shake up the markets, traders said.

"We could get some volatility tomorrow afternoon if the statement is considerably different from what we're expecting," said Thomas Wright, director of equities at JMP Securities.

The S&P 500 telecommunications sector jumped 2% on Tuesday, among the biggest gainers in the broad index, after CNBC reported that T-Mobile and Sprint were in active talks about a merger. Sprint rose 8%, while T-Mobile gained 4.4%.

Shares of health-care stocks lagged behind, with the S&P 500 health-care sector recently down 0.6%. Insurer Aetna and kidney care company DaVita lost nearly 3% apiece.

Meanwhile, U.S. government bond prices strengthened, with yield on the benchmark 10-year U.S. Treasury note recently at 2.214%, according to Tradeweb, compared with 2.230% on Monday. Yields fall as bond prices rise.

Looking forward, investors hope to get more details on the Fed's rate-hike path. Many have been skeptical the Fed will raise rates again, citing subdued inflation readings and concerns around the economic toll of major summer storms.

"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, data last week showing a bigger-than-expected jump in U.S. consumer prices gave a fresh boost to investor expectations for one more rate rise in 2017.

Federal-funds futures, used by investors to place bets on the Fed's rate-policy outlook, showed Tuesday a 57% chance that the central bank will raise interest rates again by December, according to CME Group data, up from 41% a week ago.

Elsewhere, the Stoxx Europe 600 added less than 0.1%, posting its eighth advance in the past 10 trading sessions.

Markets in Asia closed mixed, with Japan's Nikkei Stock Average jumping 2% to its highest close since August 2015 and Hong Kong's Hang Seng Index falling 0.4%.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com

(END) Dow Jones Newswires

September 19, 2017 12:43 ET (16:43 GMT)

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