Federal Reserve Chair Jerome Powell's congressional testimony will be in focus for clues about the outlook for interest rates. Powell is due to testify before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday.
At closing bell, the Dow Jones Industrial Average index declined 404.64 points, or 1.04%, to 38,585.19. The S&P500 index shed 52.30 points, or 1.02%, to 5,078.65. The tech-heavy Nasdaq Composite index was down 267.92 points, or 1.65%, to 15,939.59.
Total 8 of the 11 major S&P 500 sectors declined, with information technology sector being bottom performer, falling 2.2%, followed by real estate (down 1.24%) and consumer discretionary (down 1.31%), while energy sector was top performer, rising 0.74%.
Among economic data, the Institute for Supply Management released U.S. service sector data on Tuesday showing services PMI fell to 52.6 in February after climbing to 53.4 in January.
The Commerce Department released a report on Tuesday showing a steep drop in new orders for U.S. manufactured goods in the month of January. The report said factory orders plunged by 3.6% in January after falling by a revised 0.3% in December. The bigger than expected decrease in factory orders partly reflected a nosedive by durable goods orders, which plummeted 6.2% in January after slipping by 0.3% in December. The report also said orders for non-durable goods slumped by 1.1% in January after falling by 0.3% in the previous month. The Commerce Department also said shipments of manufactured goods slid by 1.0% in January after declining by 0.5% in December. Inventories of manufactured goods also edged down by 0.1% in January after coming in virtually unchanged in December. With shipments falling by more than inventories, the inventories-to-shipments ratio rose to 1.50 in January from 1.48 in December.
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