US STOCKS-Wall Street dips as Fed meet gets underway

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* U.S. retail sales fall in May

* Ocugen jumps on partnership for U.S. production of vaccine

* Fed kicks off two-day policy meeting

* Indexes down: Dow 0.44%, S&P 0.24%, Nasdaq 0.55% (Adds comment, details; updates prices)

By Shashank Nayar and Medha Singh

June 15 (Reuters) - U.S. stocks eased on Tuesday after the S&P 500 hit a record high earlier in the session, as a strong inflation reading for May raised caution that the Federal Reserve could taper monetary stimulus sooner than expected.

Assurance from the Fed that rising prices are transitory and falling U.S. Treasury yields have helped ease some concerns over inflation and supported U.S. stocks in recent weeks, with all eyes now on the central bank's statement at the end of its two-day policy meeting on Wednesday.

Data showed an acceleration in producer prices last month as supply chains struggle to meet demand that is being unleashed by the reopening of the economy. A separate report showed U.S. retail sales dropped more than expected in May.

"There is some concern about today's jump in producer prices and the fact that the Fed might have to change its wording to show that it has to become more vigilant regarding inflation," said Sam Stovall, chief investment strategist at CFRA Research.

"The Fed is still going to wait to make any decision regarding tapering. However, there might be some changes in its commentary in tomorrow's decision to show they are not asleep at the wheel."

The Fed is likely to announce in August or September a strategy for reducing its massive bond buying program, but won't start cutting monthly purchases until early next year, a Reuters poll of economists found.

The benchmark S&P 500, the blue-chip Dow Jones and the tech-stocks focused Nasdaq have gained 13.3%, 12.3% and 10%, respectively so far this year, largely driven by optimism about an economic reopening.

At 11:23 a.m. ET, the Dow Jones Industrial Average was down 150.94 points, or 0.44%, at 34,242.81 and the S&P 500 was down 10.07 points, or 0.24%, at 4,245.08. The Nasdaq Composite was down 78.58 points, or 0.55%, at 14,095.56.

Nine of the 11 major S&P sectors slipped. Energy stocks added 1.5% as oil prices hit multi-year highs on positive demand outlook.

The communication services sector dropped 0.2% after hitting a record high earlier in the session.

In corporate news, Biogen Inc dipped 0.7% after the drugmaker's potential therapy for choroideremia, an inherited disease that leads to vision loss, did not meet the main goal in a late-stage study.

Ocugen jumped nearly 9.1% as the drug developer prepares for potential commercial manufacturing of its COVID-19 vaccine candidate, Covaxin, in the United States and Canada.

Declining issues outnumbered advancers for a 1.64-to-1 ratio on the NYSE and for a 2.28-to-1 ratio on the Nasdaq.

The S&P index recorded 31 new 52-week highs and one new low, while the Nasdaq recorded 66 new highs and 17 new lows. (Reporting by Shashank Nayar in Bengaluru; Editing by Maju Samuel)