US benchmark equity indexes closed lower Tuesday as the Federal Reserve kicked off its two-day monetary policy meeting.

The Nasdaq Composite fell 1.7% to 17,504.1, while the S&P 500 slid 1.1% to 5,614.7. The Dow Jones Industrial Average dropped 0.6% to 41,581.3. Among sectors, communication services posted the steepest decline, while energy and health care were the sole gainers.

The central bank's Federal Open Market Committee is widely expected to again hold its benchmark lending rate steady Wednesday, following a pause in January, according to the CME FedWatch tool. Policymakers are also scheduled to outline their latest economic projections Wednesday, including the future trajectory of interest rates.

"We do not expect major changes to the FOMC's median economic projections, but the changes that we do expect are in a pessimistic direction," HSBC said in a Monday note.

US Treasury yields moved down Tuesday, with the 10-year rate falling 2.1 basis points to 4.28% and the two-year rate losing 1.3 basis points to 4.04%.

In economic news, US housing starts jumped more than expected last month as single- and multi-family projects logged double-digit growth, government data showed.

"From our lens, the general economic uncertainty and increasingly downbeat consumer sentiment mean that the housing sector is likely to drag on overall growth in the coming months," TD Economics said.

Industrial production in the US rose more than expected in February as the motor vehicle component helped drive gains in durable manufacturing output, data from the Fed showed.

"The industrial sector won't regain its stride until 2026 when the interest-rate loosening cycle will resume in full and North American tariffs will be largely removed," Oxford Economics said.

In company news, Tesla $(TSLA)$ shares fell 5.3%, among the worst performers on the S&P 500. The electric vehicle maker's declining favorability among consumers amid Chief Executive Elon Musk's involvement in politics will likely hurt deliveries and revenue this year, Oppenheimer said.

Other mega-cap tech stocks Nvidia $(NVDA)$, Microsoft $(MSFT)$, Apple $(AAPL)$, Amazon.com $(AMZN)$, Alphabet (GOOG, GOOGL), and Meta Platforms $(META)$ also saw declines Tuesday.

Alphabet's Google agreed to acquire cybersecurity startup Wiz in an all-cash deal worth $32 billion in a cloud security play.

Tencent Music Entertainment $(TME)$ posted better-than-expected fourth-quarter results. Its American depositary receipts jumped nearly 16%.

West Texas Intermediate crude fell 1.1% to $66.83 per barrel.

Gold rose 1.2% to $3,041.7 per troy ounce, while silver added 1% to $34.64 per ounce.