The Dow Jones Industrial Average decreased 228.50 points, or 0.71 percent, to 31,761.54. The S&P 500 fell 45.79 points, or 1.15 percent, to 3,921.05. The Nasdaq Composite Index sank 220.10 points, or 1.87 percent, to 11,562.57.
Eight of the 11 primary S&P 500 sectors ended in red, with consumer discretionary and communication services down 3.31 percent and 2.05 percent, respectively, leading the laggards. Utilities rose 0.61 percent, the best-performing group.
Walmart shares tumbled 7.6 percent after its profit warning. The retail giant on Monday cut its quarterly and full-year profit guidance, citing impact from rising inflation.
The Fed remains a focus on Wall Street as the U.S. central bank kicked off its two-day policy meeting on Tuesday and is expected to deliver another sizeable rate hike on Wednesday.
"What the market is really waiting for is Wednesday's FOMC (Federal Open Market Committee) announcement when the Fed will announce whether they raised interest rates by 50, 75 or 100 basis points," Kevin Matras, executive vice president of Zacks Investment Research, said in a note on Tuesday.
"Traders will also want to know what their intentions are moving forward, as there are three more Fed meetings scheduled for the remainder of the year," he added.
On the data front, the U.S. consumer confidence index fell to 95.7 in July, the lowest level since February 2021, on dimmer views of the economy amid persistent inflation, New York-based The Conference Board reported on Tuesday.
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