Stocks had rallied on Monday as investors were relieved by no new signs of bank failures over the weekend and reassured by the sale of assets in collapsed technology industry lender Silicon Valley Bank.
The central bank is widely expected to raise interest rates by 75 basis points on Wednesday at the conclusion of its two-day policy meeting, but investors will look for any signals the Fed may be considering a deceleration in interest rate hikes in the future.
Ford Motor warned last Monday that inflation-related supplier costs will run about $1 billion higher than expected in the current quarter, while FedEx Corp outlined on Thursday cost cuts of up to $2.7 billion.
The Dow Jones Industrial Average fell 313.45 points, or 1.01%, to 30,706.23, the S&P 500 lost 43.96 points, or 1.13%, to 3,855.93 and the Nasdaq Composite dropped 109.97 points, or 0.95%, to 11,425.05.