The Dow Jones Industrial Average fell 162.79 points, or 0.45 percent, to 36,068.87. The S&P 500 lost 6.74 points, or 0.14 percent, to 4,670.29. The Nasdaq Composite Index was up 6.93 points, or 0.05 percent, to 14,942.83.
At the session lows, the 30-stock index tumbled more than 590 points, and the Nasdaq shed over 2 percent.
Eight of the 11 primary S&P 500 sectors ended in red, with industrials down 1.15 percent, leading the laggards. Health care rose 1.04 percent, the best-performing group.
U.S.-listed Chinese companies traded roughly flat with five of the top 10 stocks by weight in the S&P U.S. Listed China 50 index ending the day on an upbeat note.
The above market reactions came as investors bet on faster than expected Federal Reserve moves.
Goldman Sachs economists projected the Fed will deliver more than the three rate hikes that policy makers have penciled in for this year.
Investors are also awaiting key inflation readings as the December U.S. consumer price index is slated on Wednesday, while the producer price index is set for Thursday.
For the week ending Friday, the Dow and the S&P 500 decreased 0.3 percent and 1.9 percent, respectively, while the tech-heavy Nasdaq shed 4.5 percent.
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