Stocks closed slightly lower Tuesday with investors reluctant to make decisive moves a day before hearing whether the Federal Reserve will begin curbing its monthly asset purchases in 2013.
"There is enough ammunition for them to start off even in a timid fashion tomorrow, so we're acknowledging the possibility but holding out the probability of March," Mark Luschini, chief investment strategist at Janney Montgomery Scott, said of recent reports showing an improving labor market and economy.
The upwardly revised GDP and improvements on the labor front reinforce the view that the U.S. economy is on the right track, "but the decision makers are going to need to see more information; my guess is it'll be early 2014," said Matthew Kaufler, portfolio manager at Federated Investors.
The Dow Jones Industrial Average wavered on either side of neutral.
3M shares rose nearly 3 percent after the Dow component and manufacturer of products ranging from Post-it notes to film for flat-panel televisions increased its quarterly dividend by 35 percent.
The S&P 500 fell slightly, with telecommunications the leading laggard and materials the best performing of its 10 major sectors.
The Nasdaq edged lower.
Crude-oil futures for January delivery fell 26 cents, or 0.3 percent, to $97.22 a barrel on the New York Mercantile Exchange; gold futures for February delivery fell $14.30, or 1.2 percent, to $1,230.10 an ounce.
The dollar edged lower against the currencies of major U.S. trading partners and the 10-year Treasury note yield declined 4 basis points to 2.84 percent.
Shares of Boeing rose after the plane manufacturer said late Monday that it would repurchase $10 billion in shares. Facebook climbed after the Wall Street Journal cited unidentified people familiar with the matter in reporting the social-networking site would run its first video advertisements on Thursday. Hewlett-Packard shares jumped after JPMorgan upgraded its view of the personal-computer maker to outperform.
The S&P 500 rose on Monday, rebounding after a four-session decline, as investors fixated on whether ongoing signs that the economy is improving would convince the Fed to reduce its $85 billion in monthly bond purchases as early as Wednesday.
Tuesday's economic reports had the Labor Department reporting core prices, excluding food and energy, rose 0.2 percent in November, with the inflation data coming as the Federal Open Market Committee starts a two-day session.
"What matters for the Fed is whether inflation as measured by the CPI or other measures is proving problematic. Today's report once again shows that as of now, inflation is a concern for another day," Dan Greenhaus, chief global strategist at BTIG, wrote in emailed comments.
"The market is waiting with bated breath to see what comes out of the Fed. There seems to be somewhat of a division in that there's a contingent that would like to see the tapering get under way so we could have greater certainty, and another that would like to see it continue as long as possible," said Kaufler.
A separate report had confidence among home builders jumping in December as pent-up demand from the government shutdown drove more potential buyers to new-model homes. The monthly sentiment index from the National Association of Home Builders climbed 4 points to its highest since August.
—By CNBC's Kate Gibson