United States stocks ended lower as more data and comments from Federal Reserve officials pointed to the likely pullback in Fed stimulus in the coming months.
At the close the Dow Jones Industrial Average was down 93.39 points (0.60%) at 15,518.74 points.
The broad-based S&P 500 fell 9.77 (0.57%) to 1,697.37 points.
The tech-rich Nasdaq Composite lost 27.18 (0.74%) at 3,665.77 points.
A senior United States Fed official predicted that the central bank is likely to reduce its bond-buying stimulus program later this year, and possibly as early as next month depending on economic data.
Chicago Federal Reserve Bank president Charles Evens became the third Fed official in two days to suggest the Fed could be eying a September tapering of stimulus spending, saying he “clearly” would not rule out a September start to the pullback.
“We are quite likely to reduce the flow of purchases rate starting later this year – I couldn't tell you exactly which month that will be – and it's likely to wind down over time in a couple or few stages,” Mr Evans told reporters.
Meanwhile the US trade deficit shrank by an unexpectedly large margin in June as imports fell and exports grew, according to data released on Tuesday.
The trade gap fell to $US34.2 billion ($A38.42 billion) in June, down from a revised $US44.1 billion in May, according to the US Commerce Department. Analysts had expected a deficit of $US43.4 billion, according to Briefing.com.
The United States exported $US191.2 billion in goods and services in June and had imports of $US225.4 billion.
June's imports came in at $US5.8 billion lower than May and exports were $US4.1 billion higher.