U.S. stocks declined

U.S. stocks declined, following equities' best week since July, before the Federal Reserve decides on Thursday whether the economy and turbulent financial markets can handle higher interest rates.

The Standard & Poor's 500 Index slipped 0.4 percent to 1,953.02 at 4 p.m. in New York, after the gauge rose 2.1 percent last week. Trading in S&P 500 companies was about 26 percent below the 30-day average for this time of day amid the Jewish new-year holiday.

"I think today we're seeing that tug-of-war in the market again, and nothing is going to matter until we know what the Fed's going to do," said Michael Gayed, the chief investment strategist who helps to manage $200 million at Pension Partners LLC in New York. "I think it's going to be a fun week."

Investors remain confident the Fed will raise borrowing costs this year, even as most bet the central bank will not increase rates at its Sept. 16-17 meeting. Traders are pricing in a 26 percent chance of action on Thursday, down from 48 percent before China's currency devaluation last month. Odds of a move at the December gathering are about 59 percent, according to data compiled by Bloomberg.

Words from Fed Vice Chairman Stanley Fischer in 2014 offer some support for those expecting a move on rates this week. Just months before taking over as the Fed's No.2 official last year, he said that delaying increases carried its own difficulties and the situation is always unclear and monetary policy takes time to affect the economy. "Don't overestimate the benefits of waiting for the situation to clarify," he said.

Chinese stocks slumped the most in three weeks after data added to concern that the country's economic slowdown is deepening. Industrial output missed economists' forecasts, while investment in the first eight months increased at the slowest pace since 2000.

Market swings and rapid shifts in investor sentiment have become more prevalent as uncertainty on the impact of China's slowdown coupled with the Fed's looming rate decision to whipsaw equities. For the ninth time in a row, the S&P 500 posted a weekly return that amounted to a reversal of the prior week's performance. Such a streak of alternating gains and losses has happened only three times in 20 years, according to data.