US stocks struggle to recover from Evergrande rout while investors await the outcome of Fed meeting

• US stocks were mixed Tuesday following Monday's sell-off.
• Investors are eagerly anticipating the outcome of the two-day meeting of the FOMC beginning that began on Tuesday.
• Gold, and oil edged higher. Bitcoin hovered around $42,000.

US stocks struggled to regain their footing Tuesday following a brutal sell-off sparked by beleaguered Chinese developer Evergrande during Monday's session. Investors, meanwhile, are awaiting the outcome of the Federal Reserve's two-day Federal Open Market Committee meeting beginning that kicked off on Tuesday.

The Dow Jones Industrial Average and S&P 5oo both ended lower, while the Nasdaq eked out a gain.

Here's where US indexes stood at the 4:00 p.m. close on Tuesday:

• S&P 500: 4,354.15, down 0.08%
• Dow Jones Industrial Average: 33,920.49, down 0.15% (49.98 points)
• Nasdaq Composite: 14,746.40, up 0.22%

"Financial markets have Evergrande as the top story and will enter wait-and-see mode until a meaningful update from the Chinese government," Edward Moya, senior market analyst at foreign exchange firm Oanda, said in a note Tuesday. "The Evergrande story won't lead to contagion in the US but there are so many questions about who will be protected once China says 'enough' and swoops in."

Evergrande, China's second-largest property developer, has more than $300 billion in liabilities and could miss key interest payments due Thursday. There are no signs yet that the Chinese government will step in to save the company.

On top of Evergrande concerns, investors are anxious about the Federal Reserve's potential tapering of stimulus and the risk of a prolonged period of inflation.

While several analysts, including those at BlackRock Investment Institute, do not expect Fed Chair Jerome Powell to announce any policy change this month, they are still keeping a close eye on any signal of how he plans to scale back monetary support, which includes tapering asset purchases.

"We expect the Fed to start normalizing policy rates in 2023, a much slower pace than market pricing for lift-off in 2022 indicates," the BlackRock analysts said in a note.

Another issue that might be discussed, according to Moya, is the multi-million-dollar stock purchases of Dallas and Boston Federal Reserve presidents Robert Kaplan and Eric Rosengren, which involved purchases of big-name firms like Apple, Alibaba, and Tesla.

"If the Fed struggles to deal with intensifying scrutiny after their ethics review, the FOMC could lose two of its hawkish members," Moya said.

Elsewhere, Fintech firm Revolut plans to offer commission-free stock trading to US clients as the London-based startup takes on rivals like Robinhood and Square amid a boom in retail investing, CNBC first reported Tuesday.

In cryptocurrencies, the US Department of the Treasury on Tuesday revealed it will sanction Russian-owned Suex for its role in laundering financial transactions for ransomware actors, marking the first time the agency has ever blacklisted a cryptocurrency exchange.

Meanwhile, Binance, the world's largest cryptocurrency exchange, is shutting down cryptocurrency derivative products for existing customers in Australia by the end of the year, the latest bid by the exchange to appease regulators.

Bitcoin hovered just above $42,000 after a broader cryptocurrency sell-off Monday.

Oil prices rebounded. West Texas Intermediate crude climbed 0.31%, to $70.51 per barrel. Brent crude, oil's international benchmark, rose 0.88%, to $74.57 per barrel.

Gold jumped 0.56%, to $1,774.99 per ounce.