The Dow Jones Industrial Average fell 245.25 points, or 0.72 percent, to 34,053.87. The S&P 500 lost 20.88 points, or 0.47 percent, to 4,388.71. The Nasdaq Composite Index shed 22.28 points, or 0.16 percent, to 13,667.29.
Ten of the 11 primary S&P 500 sectors ended in red, with energy and materials leading the laggards by going down 2.29 percent and 1.26 percent, respectively. Consumer discretionary bucked the trend by rising 0.75 percent.
U.S. stocks fell on Tuesday as a rally that sent the market to levels not seen in more than a year took a breather. Investors began the holiday-shortened week by taking profits, following the long weekend on the occasion of the Juneteenth federal holiday.
Wall Street is now waiting for Powell's two-day congressional testimony, starting with the U.S. House Financial Services Committee on Wednesday. There's still bearish speculation that the Fed is going to keep interest rates higher for longer, and investors will look to Powell's testimony for clues about the path of monetary policy.
"Powell's comments may help shape how the market -- and especially the tech sector, which has led this year's rally -- reacts to Fed policy in the near term," according to Chris Larkin, managing director, trading and investing at E*TRADE from Morgan Stanley, in an interview with MarketWatch.
A handful of mega-cap growth stocks have driven the U.S. equity rally this year, benefiting from investors' enthusiasm for potential beneficiaries of advances in artificial intelligence technology, said a research note published by UBS Global Wealth Management on Tuesday.
"Historically, such narrow rallies have been less sustainable. The U.S. economy is likely to cool further, and we expect S&P 500 corporate earnings to contract this year," it said.
Meanwhile, the U.S. Census Bureau's latest statistics released on Tuesday showed that privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,631,000, which is 21.7 percent above the revised April estimate of 1,340,000. The pace of construction was the highest since last April.
Latest comments