John Boehner called on President Barack Obama to propose a counter-offer on Tuesday.
Retailers like luggage maker Tumi Holding Inc and Michael Kors Holding gained on Tuesday after a positive report from Goldman Sachs Equity Research. Tumi was up 4.7 percent to $21.92 and Michael Kors gained 2.4 percent, reaching $50.92.
By contrast, discount retailers Dollar General and Family Dollar declined. Dollar General, whose shares fell 7.8 percent to $42.94, said it sees margins under pressure in 2013. Family Dollar shares dropped 8.4 percent to $64.68.
SPX Corp shares fell 9.1 percent to $62.07 and the stock was the biggest percentage decliner on the New York Stock Exchange after sources said the company is in exclusive talks to buy rival Gardner Denver, in a merger that could create an industrial machinery conglomerate with a market value over $7 billion.
The U.S. Treasury is selling its remaining stake in insurer American International Group Inc. AIG's shares were up 5.7 percent at $35.26.
The Fed began a two-day policy-setting meeting on Tuesday.
The central bank is expected to announce a new round of Treasury bond purchases when the meeting ends on Wednesday to replace its "Operation Twist" stimulus, which expires at the end of the year.
Advancers outnumbered decliners on the NYSE by about 2 to 1, and on the Nasdaq by nearly 9 to 4.