Investors were paying close attention to economic data. In its Beige Book report on regional economic activity, the Fed said the economy expanded at a "modest to moderate pace" from early October to mid-November.
It noted gains in the auto and high-tech industries and reported that retailers are "hopeful, but cautious" about the holiday shopping season.
Investors remain fixated on clues as to when the Fed might pull back, or taper, its $85 billion per month bond buying program.
Bond investors stayed focused on when the Fed might taper. The yield on the 10-year Treasury note was 2.83% after spiking to 2.85% earlier in the day, near the year's high of almost 3% back in September.
At that time, investors feared the Fed would taper at its meeting in September. It didn't. But some experts believe that the Fed could now announce it is pulling back on stimulus at the conclusion of its next meeting on December 18.
In corporate news, J.C. Penney(JCP) said Tuesday that same-store sales in November grew 10% from the same period last year. The stock, which has been the worst performer on the S&P 500 this year, is in the midst of a turnaround and has caught the attention of some major hedge funds.
J.C. Penney: The jury's still out
But investors seemed unimpressed with the decent November sales. Shares of J.C. Penney ended the day down over 4%.
Despite that, one trader on StockTwits was bullish that it would bounce back by the end of the day.