Investing.com -- U.S. stocks fell sharply on Tuesday, erasing most of their gains from the previous sessions, as two prominent Federal Reserve policymakers strongly hinted that the U.S. central bank could raise interest rates multiple times this year, providing downward pressure on the major indices.
At a joint appearance in Washington, both Atlanta Fed president Dennis Lockhart and San Francisco Fed president John Williams suggested that "two to three rate hikes," seem possible, while Lockhart noted that a rate hike will still remain on the table when the Federal Open Market Committee meets next on June 14-15. After approving its first interest rate hike in seven years at a meeting in December, the FOMC has left its benchmark Federal Funds Rate at a targeted range of 0.25-0.50% in each of its first three meetings this year. Any rate hikes by the Fed this year are viewed as bearish for equities, as investors look to capitalize on higher yields from U.S. Treasuries and other bonds.
The Dow Jones Industrial Average tumbled 180.73 or 1.02% to 17,529.98, while the NASDAQ Composite index lost 59.73 or 1.25% to 4,715.73 both closing near session-lows. The S&P 500 Composite index, meanwhile, fell 19.45 or 0.94% to 2,047.21, as nine of 10 sectors closed in the red. Stocks in the Utilities, Consumer Goods and Consumer Services lagged, each falling by more than 1% on the session. Stocks in the energy industry, the lone sector to post positive gains on the day, led on Tuesday. The S&P remains near a key technical level at 2,043.
The top performer on the Dow was Caterpillar Inc (NYSE:CAT), which gained 0.35 or 0.50% to 71.05. It came as gold futures ticked higher on Tuesday remaining near 15-month highs, as billionaire investor George Soros disclosed a $385 million stake in the precious metal. Caterpillar, the world's largest construction equipment manufacturer, is sensitive to any changes in metal prices.
The worst performer was Microsoft Corporation (NASDAQ:MSFT), which fell 1.32 or 2.55% to 50.51. Microsoft closed just below Home Depot Inc (NYSE:HD), which lost 3.34 or 2.47% to 132.00, in spite of reporting upbeat earnings and strong full-year guidance on Tuesday. While Home Depot (NYSE:HD)'s comparative store sales increased by 7.4% for the quarter, their comps decelerated in all three months of the period. After surging 10.2% in February, Home Depot's same-store sales rose by 4.3% in April, a key sales period for the home improvement company.
The biggest gainer on the NASDAQ was Endo International PLC (NASDAQ:ENDP), which surged 0.87 or 6.08% to 15.17. Shares in the specialty drug maker are up by more than 11% since falling to 52-week lows last week, amid widespread pricing concerns. The worst performer was Kraft Heinz Co (NASDAQ:KHC), which fell 3.71 or 4.32% to 82.16. Shares in the major food company are virtually flat since their merger last year.
The top performer on the S&P 500 was Southwestern Energy Company (NYSE:SWN), which added 0.80 or 6.98% to 12.26. Despite the rally in global energy prices, shares in Southwestern Energy are still down by more than 55% over the last 52 weeks. The worst performer was Kimco Realty Corporation (NYSE:KIM), which declined 1.19 or 4.09% to 27.93. Shares in the New York-based Real Estate Investment Trust (REIT) tumbled amid reports from FINRA that total short interest in Kimco increased to 10.47 million, up by 6.13% from its last report.
Celebrating its 224th anniversary on Tuesday, the New York Stock Exchange had 1,952 declining issues – greatly outnumbering advancing issues of 1,095 by a 62-38% margin.