As investors started this week by earning profits with a prolonged surge despite signals of dropped global demand, US stocks weakened on Tuesday and closed in the negative territory.
The congressional testimony of Jerome Powell, the Federal Reserve Chairman on Wednesday might influence the market.
Exxon Mobil Corp., one of the world's largest oil companies, weighed on the S&P 500 and the Dow as all three major US equity indices ended the session in loss but off session lows.
The wide sell-off follows the longest winning streaks for the Nasdaq since March of 2019 while the S&P 500 since November of 2021.
The benchmark S&P 500 index has increased 14.3% by now this year, even after Tuesday's decline.
According to Robert Pavlik, a senior portfolio manager from Dakota Wealth, the market is attempting to check if these recent gains will continue. The market goes through cycles and the recent increase has taken many by surprise.
Investors are now anticipating Powell's hearing before Congress, which will begin on Wednesday with the US House Financial Services Committee. This testimony will be closely watched for hints about how long the central bank is going to maintain its restrictive stance.
In addition, Pavlik said that the Fed has not given the increases much time as to actually affect the economy.
After China lowered its lending standards to stimulate stagnant demand that offset a 21.7% increase in the housing starts — the greatest monthly increase within thirty years, concerns over declining global demand grew.
The S&P 500 dropped 20.88 points or 0.47%, to 4,388.71, the Nasdaq Composite fell 22.28 points or 0.16%, to 13,667.29, and the Dow Jones Industrial Average decreased 245.25 points or 0.72%, to 34,053.87.
All but one of the S&P 500's 11 key sectors, consumer discretionary shares finished in the negative territory.
The biggest daily decline in the energy sector in more than a month, 2.3%, was experienced by energy shares as concerns of deteriorating Chinese demand drove down crude prices.
Rivals in the electric vehicle market,Tesla Inc and Rivian Automotive Inc both saw gains of 5.5% and 5.3% following Rivian's announcement that it had decided to adopt charging standard of Tesla.
Following KKR & Co's agreement to buy as mush as 40 billion euros, namely $43.71 billion, in "buy now, pay later" loans from the payments company in Europe, PayPal Holdings increased 3.7%.
Morgan Stanley stated that it anticipates margin headwinds resulting from the firm's excess inventory, Nike then had a 3.6% decline.
Following the e-commerce company's announcement that Daniel Zhang was leaving his positions as chairman and CEO to concentrate on the cloud portion of the business, stocks of Alibaba Group that are traded on the New York Stock Exchange fell 4.5%.
According to a source, European antitrust officials are getting ready to look into Adobe Inc.'s acquisition of cloud-based designers platform Figma.
Eli Lilly and Co announced that it will acquire Dice Therapeutics Inc in a deal for approximately $2.4 billion, after that, the company's share price jumped 37.2%.
In after-hours dealing following the release of the company's quarterly earnings, stocks of Fedex Corp fell by about 5%.
On the New York Stock Exchange, declining issues exceeded advancing ones by a ratio of 2.23 to 1; on the Nasdaq, decliners were in the lead by a ratio of 1.63 to 1.
With no new lows and 14 new highs in 52 weeks for the S&P 500, the Nasdaq Composite saw 68 new highs as well as 87 new lows.
Comparatively to average 11.36 billion for the entire session through the previous 20 dealing days, there were 11.15 billion shares traded on US exchanges.