(AP) -- Technology and internet companies led a broad slide for U.S. stocks Tuesday after discouraging economic data and cautionary remarks from the head of the Federal Reserve weighed on the market.
The sell-off marked the third straight loss for the market and the biggest drop this month for the Dow Jones Industrial Average and the S&P 500 index, which hit an all-time high only last week.
In an early afternoon speech, Fed Chairman Jerome Powell noted that the economic outlook has become cloudier since early May amid uncertainty over trade and global growth. Earlier Tuesday, reports showed a decline in consumer confidence and more weakness in the housing market.
Powell said the Fed is reassessing its interest rate policy, though he did not commit to a rate cut. Separate comments from James Bullard, president of the Fed's St. Louis regional bank, may have put a damper on the market's expectations for big rate cut.
In an interview with Bloomberg Television, Bullard said a half-point rate cut --- which many investors have been expecting --- would be "overdone," adding that a quarter-point cut would suffice to shield the economy from a slowdown.
"The risk is to the downside if they don't cut (rates) when the markets are fully expecting it," said Randy Frederick, vice president of trading & derivatives at Charles Schwab.
The S&P 500 index fell 27.97 points, or 1%, to 2,917.38. The Dow dropped 179.32 points, or 0.7%, to 26,548.22. The Nasdaq composite, which is heavily weighted with technology stocks, slid 120.98 points, or 1.5%, to 7,884.72.
The Russell 2000 index of smaller company stocks gave up 9.05 points, or 0.6%, to 1,521.04.
The market is coming off its third straight weekly gain. The benchmark S&P 500 index is about 1.3% below the record high it set on Thursday.
Prior statements from Fed officials have raised investors' expectations that the central bank will cut rates as early as next month in response to a slowing global economy. That expectation sparked a rally in the first three weeks of June that wiped out the market's losses from a steep sell-off in May.
But traders have grown cautious this week. Trade policy remains the biggest source of uncertainty looming over the market. Investors are worried about the trade dispute between the U.S. and China and its potential impact on global economic growth and corporate profits.
Presidents Donald Trump and Xi Jinping will meet this week at the Group of 20 meeting of major economies in Japan. The world's two largest economies spent much of the current quarter escalating their trade war and giving Wall Street jitters over prospects for economic growth.
"You could almost tie every piece of weakening economic data, whether it's domestic or global, back either directly or indirectly to this trade issue," Frederick said. "What the whole global economy needs is some certainty on trade, but what we're doing is we're trying to treat it by cutting interest rates."
Investors are also looking ahead to next month, when many investors expect the Fed to cut rates.
On Tuesday, Powell reiterated that the central bank is ready to "act as appropriate" to keep the economy growing, though the remarks failed to give the market a boost.
"The expectations pretty quickly over the last few months went from looking at probably another rate hike to expecting actually a cut," said Craig Birk, chief investment officer at Personal Capital. "Powell and the Fed are trying to communicate that they do want to remain data-driven and that nothing's certain yet."
Fed actions aside, traders remain concerned that corporate profits might suffer should the kind of economic slowdown that would prompt the Fed to cut rates take hold.
On Tuesday, the Conference Board said that U.S. consumer confidence dropped to its lowest level in more than 18 months. Two other reports showed home price gains slowed for the 13th straight month in April and sales of new U.S. homes slumped in May.
Homebuilders fell broadly as investors weighed the latest housing data. Lennar led the pack, after the builder said a conference call with analysts that tariffs on Chinese goods were adding an average of $500 to the cost of each new home. The stock dropped 6.2%.
Among other homebuilders, PulteGroup fell 2.4% and D.R. Horton dropped 3.9%.
Technology and internet stocks led the losses Tuesday. Microsoft fell 3.2% and Facebook fell 2%. FedEx dropped 3.1% and weighed down industrial stocks.
Bond prices rose, sending yields lower, as investors shifted money into U.S. bonds as a hedge against a possible downturn in the economy or further escalation in trade tensions. The yield on the 10-year Treasury note fell to 1.99% from 2.02% late Monday.
Banks and other financial companies declined as yields fell. Lower bond yields hurt a bank's ability to charge higher interest on loans. Citigroup slid 1.3%.
A surge in the share price of Botox maker Allergan helped stem the losses in health care stocks. The company vaulted 25.4% on news that it is being bought by drug developer AbbVie for around $63 billion. AbbVie slumped 16.3%.
Major stock indexes in Europe finished mostly lower Tuesday.
Energy futures closed mostly higher. Benchmark crude oil fell 7 cents to settle at $57.83 a barrel. Brent crude oil, the international standard, rose 19 cents to close at $65.05 a barrel. Wholesale gasoline rose 2 cents to $1.87 per gallon. Heating oil climbed 1 cent to $1.92 per gallon. Natural gas rose 1 cent to $2.31 per 1,000 cubic feet.
Gold rose 60 cents to $1,414.90 per ounce, silver rose 92 cents to $15.29 per ounce and copper rose 3 cents to $2.74 per pound.
The dollar fell to 107.12 Japanese yen from 107.32 yen on Monday. The euro weakened to $1.1373 from $1.1401.