A decline in energy and healthcare stocks weighed on Wall Street on a relatively quiet Tuesday as investors awaited the outcome of the U.S. Federal Reserve's two-day policy meeting.
Global markets fell and the yen rose earlier in the day after the Bank of Japan's lowered inflation expectations suggested it may increase its stimulus program.
"After a very strong bounce in risk assets in the recent few weeks, investors are collectively holding their breath waiting for the Fed tomorrow," said Bill Merz, investment strategist at U.S. Bank Wealth Management in Minneapolis.
The Fed is not expected to raise interest rates at its meeting, which starts on Tuesday, but its comments will be parsed for clues on the path of future hikes.
Investors will also keep a close eye on data this week, after recent reports have painted a mixed picture of the health of the U.S. economy.
One report on Tuesday showed retail sales fell less than expected, but a sharp downward revision to January's sales could reignite concerns about the economy's growth prospects.
At 12:40 p.m. ET, the Dow Jones industrial average was down 34.86 points, or 0.2%, at 17,194.27.
The S&P 500 was down 10.02 points, or 0.5%, at 2,009.62. Six of the 10 major sectors were lower.
The Nasdaq Composite was down 26.01 points, or 0.55%, at 4,724.28.
A renewed drop in oil prices dragged the S&P energy sector down 1.7%. Chevron was down 2% at $92.38.
Valeant Pharma's near 50% slide to $35 dominated most of the market's activity. The Canadian drugmaker cut its 2016 revenue forecast and flagged the risk of defaulting on its debt, eroding investor confidence in the troubled company.
The S&P healthcare sector fell 1.28%, while the Nasdaq biotechnology sector was off 3%.
Eli Lilly was down 4.5% at $70.56 after the drugmaker narrowed the goals of a key study of its experimental Alzheimer's drug. The stock was the biggest drag on the S&P 500.
Apple was up 2.2% at $104.82 after Morgan Stanley said iPhone demand for March was tracking ahead of expectations.
Mead Johnson rose 9.8% to $82.80 with traders attributing gains to a report that sparked deal chatter.
Declining issues outnumbered advancing ones on the NYSE by 2,382 to 597. On the Nasdaq, 2,032 issues fell and 686 advanced.
The S&P 500 index showed 18 new 52-week highs and one new low, while the Nasdaq recorded 24 new highs and 33 new lows.