Dow, S&P500 nearly flat, as all eyes watch Fed meeting

The Dow and S&P 500 closed near the flatline on Tuesday, while techs climbed to boost the Nasdaq to a fresh 12-year high, as investors remained cautious ahead of the Federal Reserve's policy statement.

(Read more:Wall Street pros: Fall taper priced in...sort of)

The Dow Jones Industrial Average closed just over one point lower, dragged by Verizon and AT&T.

The S&P 500 eked out a small gain, while the Nasdaq gained 17 points to hit a high of 3,616.47. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded above 13.

Among key S&P sectors, telecoms dragged, while techs held their gains.

Among techs, Facebook advanced more than 6 percent after the social-networking giant announced the launch of Facebook Mobile Games Publishing, a "pilot program to help small and medium-sized developers take their mobile games global." The stock has surged more than 45 percent so far this month and is trading close to its IPO price of $38 a share.

(Read more: Facebook nearing its IPO price. Here's why)

With quarterly results in from nearly 60 percent of the S&P 500 companies, 67 percent have beaten earnings expectations—in line with the average beat over the last four quarters. Meanwhile, about 55 percent of the companies have beaten revenue expectations, more than the 48 percent of revenue beats in the past four earnings seasons, according to the latest data from Thomson Reuters.

If all remaining companies report earnings in line with estimates, earnings will be up 4 percent from last year's second quarter.

(Read more:What earnings seasonis saying about road ahead)

But trading volume was muted again as investors looked ahead to the statement from Federal Reserve's policy-setting meeting on Tuesday and Wednesday. In addition, the first reading of second-quarter gross domestic product will be due Wednesday. And the closely-watched July employment report will be reported Friday.

The Fed is expected to maintain its accommodative monetary policy, but investors will be looking for hints on when the central bank might start scaling back on its monthly bond-buying program. In addition, markets will also be eager for hints for who may replace Ben Bernanke next year as the Fed's chairman.

(Read more:Fed expectations: will they stay or will they slow?)

"It's a pivotal time for Fed policy, and it would be advantageous to have someone at the helm who had already gone through the analytical process of getting comfortable with the last five years of policy, rather than coming in with a completely clean slate and trying to potentially reinvent it," said Ian Lyngen, senior Treasury strategist at CRT Capital.

(Read more:Fed intrigue, not policy, has market attention)

On the economic front, single-family home prices rose 1 percent in May on a seasonally adjusted basis, according to the S&P/Case-Shiller composite index of 20 metropolitan areas. Economists polled by Reuters expected a gain of 1.5 percent. Meanwhile, consumer confidence slipped slightly to a reading of 80.3 in July from an upwardly revised 82.1 in June, according to the Conference Board. Economists surveyed by Reuters expected a reading of 81.1.

The Japanese yen weakened against the dollar to above the 98-level in early trade, leading the export-heavy Nikkei index to rally 1.5 percent. Meanwhile, South Korea's Kospi added 0.9 percent and the Shanghai Composite traded within sight of the 2,000 mark.

European shares rose after an upbeat German consumer confidence report. The Gfk research institute said its forward-looking consumer index hit its highest level since September 2007, thanks to an improving labor market and expectations for more robust economic growth.