Stocks ended mixed on Tuesday, with the S&P 500 and Dow off slightly and the Nasdaq higher, a day after a bevy of concerns out of China and in Washington spurred a steep sell-off across risk assets.

Traders also turned their attention to the start of the Federal Reserve's latest two-day monetary policy-setting meeting, where the central bank is expected to give hints about curtailing its massive stimulus that's helped contain the worst economic effects of COVID-19.

On Monday, the Dow had closed lower by more than 600 points, or about 1.8%, while the Nasdaq shed more than 2%. Fears of a financial contagion that could ensue if China's largest real estate developer China Evergrande defaults under its massive debt burden served as one major point of concern for investors at the start of the week, triggering a global equity rout that put the S&P 500 on track for its third straight weekly decline.

This built on worries from earlier this month as Wall Street pundits revised down economic and profit growth expectations for the remaining months of the year.

And this week, investors are facing additional uncertainty over debates in Washington to raise the U.S. debt ceiling to prevent a government shutdown and U.S. government defaults on federal payments, and avoid what Treasury Secretary Janet Yellen said would become "widespread economic catastrophe."

On Wednesday, the U.S. Federal Open Market Committee (FOMC) is set to deliver its latest monetary policy decision, which is expected to show the Federal Reserve is nearing the announcement of the timing of its plan to begin tapering its asset-purchase program that had helped support the economic recovery.

Still, a number of equity strategists offered a sanguine take despite the risks.

"Markets are clearly having some angst on the potential spillover effects from Evergrande, along with some nervousness over the September FOMC meeting. We’ve been in the camp that we’re overdue for a correction," Cliff Hodge, chief investment officer for Cornerstone Wealth, wrote in an email. Monday evening. "At the moment, we’re not worried about a market crash. The Fed and Evergrande are not new. The market has known about both of these for a couple weeks in the case of Evergrande and a couple of months now for the Fed."

"Sentiment is overly bearish, and institutions are well-hedged going into these events," he added. "Markets don’t crash when everyone expects it. They crash when everyone is crowded and levered long."

Others struck a similar tone.

"I think what people are missing if you're leaning into this with a sell button is the fact that the economy is still expanding. Yes, it's slowed down from the late spring, early summer peak, but we still have an economic expansion that's likely to take hold here," Jason Ware, Albion Financial Group chief investment officer, told Yahoo Finance Live Monday afternoon.

"We have an economy that's working, we have record earnings that we're going to hit this year, we have a Fed that's still very much in full accommodation mode — and by the way, at their meeting this week, they're probably going to be discussing what's happening in China [as] just another reason for them to not taper this month," he added. "And then finally, we have a fiscal authority that's still in full-on wanting to stimulate the economy with spending."

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4:06 p.m. ET: Stocks end mixed after Evergrande losses; Nasdaq leads with gain of 0.2%

Here were the main moves in markets as of 4:06 p.m. ET:

• S&P 500 (^GSPC): -3.54 (-0.08%) to 4,354.19

• Dow (^DJI): -50.63 (-0.15%) to 33,919.84

• Nasdaq (^IXIC): +32.49 (+0.22%) to 14,746.40

• Crude (CL=F): +$0.22 (+0.31%) to $70.51 a barrel

• Gold (GC=F): +$11.40 (+0.65%) to $1,775.20 per ounce

• 10-year Treasury (^TNX): +1.5 bps to yield 1.3240%

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12:50 p.m. ET: Any further stock downside is likely 'going to be very, very shallow': Strategist

The three major indexes began the week extending a September slide, giving back gains after a seven-month winning streak.

“I think we were due for some sort of market correction," Ryan Payne, Payne Capital Management president, told Yahoo Finance Live on Tuesday. "I think we could see some more selling here, but I don’t know how severe it’s going to be.”

“If you think about what’s going on with the economy right now, what’s going on with company profits — companies are going to continue to be very, very profitable in the next year,” he added. “The economy is still going to run relatively hot next year."

"And in the meantime the world is awash in so much cash … it’s crazy how much money is out there right now," Payne said. "From my standpoint, that money is either going to spent in the economy, which is great for profits, or you need to get a return on your money, since inflation is real right now. We’ve seen heightened inflation — sitting in cash just isn’t an option. So I think you're going to see a lot more money get funneled into the stock market here, which says to me that this correction or selloff is going to be very, very shallow."

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11:00 a.m. ET: Stocks erase earlier gains, trading near the flatline

The three major indexes wiped out earlier gains around 11 a.m. in New York, as lingering concerns over China Evergrande and the fundamental backdrop weighed on the recovery rally.

The materials, energy and industrials sectors lagged in the S&P 500, pulling the index just a tick below the flat line. The Dow shed fewer than 20 points, or about 0.1%, as Caterpillar and Dow underperformed for another session. The 30-stock index had previously been up by more than 300 points at session highs.

Treasury yields steadied after gaining on Monday, and the benchmark 10-year note's yield hovered just above 1.3%.

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9:30 a.m. ET: Stocks open to the upside

Here's where markets were trading at the opening bell:

• S&P 500 (^GSPC): 4,379.46, +21.73 (+0.50%)

• Dow (^DJI): 34,145.84, +175.37 (+0.52%)

• Nasdaq (^IXIC): 14,790.44, +76.54 (+0.52%)

• Crude (CL=F): $70.78 per barrel, +$0.49 (+0.70%)

• Gold (GC=F): $1,773.60 per ounce, +$9.80 (+0.56%)

• 10-year Treasury (^TNX): flat, yielding 1.311%

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8:30 a.m. ET: Homebuilding picks up

Housing starts rose 3.9% to a seasonally adjusted annual rate of 1.615 million units in August, according to new data released by the U.S. Commerce Department. The results beat analysts' expectations of 1.55 million units, according to Bloomberg consensus. July starts were revised to 1.554 million units, up from 1.53 million. Meanwhile, building permits in August rose 6% above a revised 1.63 million units a month earlier to 1.728 million units.

“The pace of new construction reflected homebuilder shifts toward higher margin projects amid fluctuating costs," said George Ratiu, manager of economic research for Realtor.com, in a press statement following the results. "As August saw homebuilder sentiment dip over concerns of slipping buyer traffic and sales, builders sought permits for more multifamily projects. However, this week’s September sentiment numbers show a rebound is in the works, as residential construction companies work through their order backlog and look forward to increased traffic heading into 2022."

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7:20 a.m. ET Tuesday: Stock futures rise, recovering some of Monday's losses

Here's where markets were trading Tuesday morning:

• S&P 500 futures (ES=F): +34.75 points (+0.8%), at 4,383.00

• Dow futures (YM=F): +293 points (+0.9%), at 34,132.00

• Nasdaq futures (NQ=F): +109 points (+0.73%) to 15,118.50

• Crude (CL=F): +$0.73 (+1.04%) to $71.02 a barrel

• Gold (GC=F): +$3.50 (+0.2%) to $1,767.30 per ounce

• 10-year Treasury (^TNX): +1.9 bps to yield 1.328%

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6:15 p.m. ET Monday: Stock futures trade mixed after sell-off

Here were the main moves in markets as of Monday evening:

• S&P 500 futures (ES=F): -73 points (-1.65%), at 4,348.75

• Dow futures (YM=F): +16 points (+0.05%), at 33,855.00

• Nasdaq futures (NQ=F): +3.25 points (+0.02%) to 15,012.75

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter