Wall Street ended mixed in thin trading on Tuesday as investors were awaiting the outcome of a key Federal Reserve meeting.
After rising as much as 148 points, the blue-chip Dow Jones industrial average ended with very small gains, adding mere 7.65 points, or 0.07 percent, to 11,408.66.
Among its 30 components, 16 stocks ended in positive territory, led by a 1.3 percent increase in shares of Home Depot.
The broader Standard & Poor's 500 slipped 2.00 points, or 0.17 percent, to 1,202.09 at the close while the Nasdaq Composite Index lost 22.59 points, or 0.86 percent, to 2, 590.24, the weakest in three major averages.
For every stock rising, nearly two declined on the New York Stock Exchange, where 926 million shares changed hands.
Major indexes traded higher in morning session as investors were looking forward to the two-day Fed meeting, hoping the central bank will take further steps to help the fragile recovery in the face of recent lackluster reports.
Meanwhile, a much better-than-expected bond auction in Greece also boost sentiment as discussions to provide additional bailout funds for Greece continued on Tuesday, a positive step to the right direction.
However, market sentiment gone sour in the afternoon after a report showed European inspectors would wait until early Oct. to make a decision on whether to provide Greece with another aid, which added to uncertainties to the debt situation.
Adding to the worries, Standard & Poor's Ratings Services slashed Italy's sovereign-debt rating late Monday by one notch and kept its outlook negative, citing the weak economic growth and fragile government coalition in the eurozone's third biggest economy.
Investors were also confronted with a frustrating report, showing the world economy has entered a "dangerous new phase."
As a result, the International Monetary Fund on Tuesday sharply downgraded its economic outlook for the United States and Europe through the end of next year.
The IMF expected the U.S. economy to grow just 1.5 percent this year and 1.8 percent in 2012, down from its June forecast of 2.5 percent in 2011 and 2.7 percent next year.
"The global economy has entered a dangerous new phase," said Olivier Blanchard, the IMF's chief economist. "The recovery has weakened considerably. Strong policies are needed to improve the outlook and reduce the risks."
Among stocks in focus, Apple hit another all-time high after Wedbush Securities, a privately-held financial services and investment firm based in Los Angeles, raised its price target on the tech giant to 530 dollars from 510 dollars.
In other markets, the U.S. dollar traded mixed against major currencies in late New York trading, while oil prices gained on hopes of more Greece bailout and Fed stimulus.
Light, sweet crude for Oct. delivery rose 1.19 dollars, or 1.39 percent to settle at 86.89 dollars a barrel on the New York Mercantile Exchange, after trading from 85.11 dollars to 87.46 dollars.
