U.S. blue-chip stocks closed slightly lower on Monday on light volume as investors turned cautious while they awaited the outcome of new Fed Chairman Ben Bernanke's first policy-setting meeting, which may give clues about the outlook for interest rates.

The Nasdaq inched up, helped by small gains in several heavily weighted technology shares like Google Inc. (GOOG) and Intel Corp. (INTC).

The Dow Jones industrial average declined 29.86 points, or 0.26 percent, to 11,250.11. The Standard & Poor's 500 Index was down 1.34 points, or 0.10 percent, at 1,301.61. The Nasdaq Composite Index was up 2.76 points, or 0.12 percent, at 2,315.58.

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The Federal Open Market Committee, which began its two-day meeting on Monday afternoon, is expected to raise the fed funds target by a quarter-percentage point to 4.75 percent from 4.5 percent. But concerns about the size of future rate hikes — and how much longer the Fed's tightening cycle might last — have investors on edge.

"The market is waiting with bated breath," said Paul Nolte, director of investments at Hinsdale Associates. "It's really going to be the comments that are important, now that we've got a new commentary author for the first time in a long while. We're throwing out the Greenspan dictionary and we're creating the Bernanke dictionary."

The Dow Jones industrial average declined 29.86 points, or 0.26 percent, to 11,250.11. The Standard & Poor's 500 Index was down 1.34 points, or 0.10 percent, at 1,301.61. The Nasdaq Composite Index was up 2.76 points, or 0.12 percent, at 2,315.58.

The Fed's decision and statement will be released on Tuesday about 2:15 p.m.

Investors fear rising interest rates will slow down the economy and hurt corporate earnings.

Among rate-sensitive financial services shares, American International Group Inc. (AIG) was down 0.4 percent, or 28 cents, at $67.15 on the New York Stock Exchange and helped pull on the blue-chip Dow average.

Shares of Johnson & Johnson (JNJ) dropped after U.S. regulators approved a new dosing regimen for anemia drug, Aranesp, made by rival Amgen Inc. (AMGN) Johnson & Johnson sells a competing drug.

Shares of Johnson & Johnson fell 0.8 percent, or 45 cents, to $59.94 on the NSYE and ranked among the Dow's biggest decliners. On the Nasdaq, Amgen shares slipped 0.1 percent, or 8 cents, to $73.10.

JPMorgan lowered its investment rating on orthopedic device makers Zimmer Holdings Inc. (ZMH) and Stryker Corp. (SYK), citing decelerating revenue growth. Zimmer shares slid 3.7 percent, or $2.55, to $66, while Stryker shares dropped 5.6 percent, or $2.67, to $44.78.

In Nasdaq trading, shares of chip maker Intel rose 0.8 percent, or 15 cents, to $19.75 after First Albany lifted its rating on the stock.

Google shares gained 1.1 percent, or $3.89, to $369.69. The Web search company's shares are set to join the S&P 500 index after the close of trading on Friday.

"It's not necessarily the overall market, but bigger-cap names that are helping to move the Nasdaq index," said Michael James, senior trader at Wedbush Morgan.

"But I don't think too much of a sentiment conclusion should be drawn from that. The main action will come after the Fed meeting."

Trading was light on the NYSE, with about 1.37 billion shares changing hands, far below last year's daily average of 1.61 billion, while on Nasdaq, about 1.88 billion shares traded, slightly above last year's daily average of 1.80 billion.

Declining stocks outnumbered advancing ones by a ratio of 4 to 3 on the NYSE. Decliners and advancers were nearly equal on Nasdaq.

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