The S&P 500 and the Nasdaq were subdued in choppy trading Tuesday, as investors turned cautious ahead of an anticipated interest rate cut from the Federal Reserve on Wednesday and assessed the latest retail sales reading.

Investors largely priced in a 25 basis point cut from the U.S. central bank at the conclusion of its two-day meeting on Wednesday to offset the deterioration in the U.S. labor market, evidenced by numerous recent economic indicators.

U.S. retail sales increased more than expected in August, data from the Commerce Department showed on Tuesday, but did little to change already priced-in rate cut expectations.

Markets are still anticipating a total of about 68 basis points in monetary policy easing by end-2025, data compiled by LSEG showed.

"It seems (to be) consensus that the Fed is going to cut by 25 basis points ... I don't know if August retail sales are going to be enough to move market sentiment in a day where investors are clearly downshifting into a wait-and-see mode," said Art Hogan, chief market strategist at B Riley Wealth.

Rate cut expectations remained unchanged after the U.S. Senate confirmed economic adviser Stephen Miran to the Fed Board and an appeals court rejected President Donald Trump's bid to fire Fed Governor Lisa Cook.

Financial stocks weighed on the benchmark index, with the sector down 0.7%, leading declines. An index tracking regional banks fell 1.8%.

Losses in UnitedHealth and Microsoft weighed heavily on the Dow.

At 11:14 a.m. EST, the Dow Jones Industrial Average fell 149.79 points, or 0.33%, the S&P 500 lost 9.01 points, or 0.14%, and the Nasdaq Composite lost 17.79 points, or 0.08%.

Eight of the 11 S&P 500 sub-sectors were lower. An 8% fall in Warner Bros Discovery dragged down the Communication services sector. TD Cowen downgraded the media company's rating to "hold" from "buy."

Conversely, energy stocks advanced 0.9% tracking higher oil prices, while gains in Tesla and Amazon lifted the consumer discretionary sector.

The S&P 500 and the Nasdaq closed at record highs on Monday, helped by robust gains in Tesla and Alphabet, with the latter zooming past $3 trillion in market valuation for the first time.

Wall Street's main indexes have gained so far in September - a month deemed bad for U.S. equities historically — where the benchmark S&P 500 has lost 1.5% on average since 2000, data compiled by LSEG showed.

Among other stocks, Dave & Buster's Entertainment plunged 17.4% after the entertainment and dining venues operator missed analysts' expectations for second-quarter revenue and profit.

Trump said that the U.S. and China have a deal that will keep the short-video app TikTok operating in the U.S. CNBC, citing sources, said Oracle will keep its TikTok cloud deal under new agreement. It gained 3%.

Webtoon Entertainment soared 28% after the online comics platform and Disney agreed to create a new digital comics platform to feature comic content from Disney's portfolio, including "Marvel" and "Star Wars."

Declining issues outnumbered advancers by a 1.58-to-1 ratio on the NYSE and by a 1.45-to-1 ratio on the Nasdaq.

The S&P 500 posted 12 new 52-week highs and eight new lows, while the Nasdaq Composite recorded 56 new highs and 35 new lows.