Wall Street lower on taper fears

Soft inflation dampens taper expectations, but investors remain nervous.

United States stocks have drifted lower in afternoon trade as the Federal Reserve begins a two-day meeting to decide whether to scale back its aggressive stimulus program.

At 0515 AEDT, the Dow Jones Industrial Average had lost 15.32 points, or 0.10%, to 15,869.25.

The broad-based S&P 500 fell 5.41 points, or 0.30%, to 1,781.13, while the tech-rich Nasdaq Composite Index declined 4.40 points, or 0.11%, to 4,025.12.

Markets eagerly await Wednesday's announcement by the Federal Open Market Committee on whether economic conditions are strong enough to immediately scale back the $US85 billion ($A95.31 billion) a month quantitative easing program.

Briefing.com analyst Patrick O'Hare said trade could be "fitful" on Tuesday as the market "waits for the actual decision amid plenty of speculation as to what the FOMC is likely to do".

Two fresh economic data points on Tuesday leaned against the 'taper' of stimulus: consumer prices were unchanged in November, signalling inflation remains well below the Fed's inflation target; and income growth for US citizens remained very slow, at 1.1% year on year.