* American Airlines shares up; oil prices fall
* Investors wait for Fed comment on rate hikes
* Indexes: Dow down 0.7 pct, S&P down 0.3 pct, Nasdaq up 0.2 pct (Updates to close)
By Caroline Valetkevitch
March 17 (Reuters) - The Dow and S&P 500 fell on Tuesday as commodity-related shares declined and nervousness increased ahead of a Federal Reserve statement, while the Nasdaq ended higher.
Stocks cut losses in afternoon trading, led by a rise in tech shares. The S&P 500 technology index was up 0.1 percent, helped by gains in Apple, up 1.7 percent at $127.04, and Facebook, up 1.7 percent at $79.36.
After the bell, shares of Oracle rose 3.4 percent to $44.33 following results.
Investors were anxious as the Federal Open Market Committee kicked off its two-day meeting, to be followed by a statement from Chair Janet Yellen Wednesday afternoon.
Most economists expect the Fed to remove a pledge to be "patient" about raising interest rates from its statement, but analysts said the Fed may still be on track to raise rates by June.
"If they're still on pace for a mid-year move, whatever language they use doesn't make a difference," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
Among S&P 500 sectors, materials was the weakest with a 1.2 percent decline, led by DuPont, down 3.1 percent at $74.68. The energy sector was down 0.5 percent as oil prices fell further, pressured by concerns over a growing supply glut.
The Dow Jones industrial average fell 128.34 points, or 0.71 percent, to 17,849.08, the S&P 500 lost 6.99 points, or 0.34 percent, to 2,074.2 and the Nasdaq Composite added 7.93 points, or 0.16 percent, to 4,937.44.
The benchmark S&P 500 index on Monday had seen its biggest percentage gain since Feb. 3.
While higher rates are a sign of strength in the U.S. economy, some investors question whether the economy is strong enough to handle the increased borrowing costs.
Johnson & Johnson weighed most heavily on the S&P 500 with a 1.2 percent decline to $99.89.
Also boosting the Nasdaq, shares in American Airlines rose 6.9 percent to $53.69 after an announcement that it would join the S&P 500.
About 6.1 billion shares changed hands on U.S. exchanges, below the 6.6 billion average for the month to date, according to BATS Global Markets.
Declining issues outnumbered advancing ones on the NYSE by 1,607 to 1,429, for a 1.12-to-1 ratio; on the Nasdaq, 1,384 issues rose and 1,330 fell, for a 1.04-to-1 ratio favoring advancers.
The S&P 500 posted 26 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 112 new highs and 62 new lows. (Editing by Nick Zieminski)