Investing.com -- U.S. stocks fell out of record territory on Tuesday, as investors eyed the release of the minutes from the Federal Reserve's July meeting, while a key policymaker hinted that it could be appropriate to raise interest rates in the coming months as the economy demonstrates continued improvement.
The Dow Jones Industrial Average fell 84.03 or 0.45% to 18,552.02, while the NASDAQ Composite index lost 34.91 or 0.66% to 5,227.11, each moving off record intraday and closing highs from the previous day. The S&P 500 Composite index, meanwhile, fell 12.00 or 0.55% to 2,178.15. On the S&P 500, nine of 10 sectors closed in the red, as stocks in the Telecom and Utilities industries lagged. Stocks in the interest rate sensitive, defensive industries performed poorly in Tuesday's session, each falling by more than 1%. Stocks in the Energy sector led, closing the session as the only industry in the green.
On Monday, all three major indices on Wall Street closed at all-time record highs for the second time in three sessions. When the Dow, NASDAQ and S&P 500 all closed at a previous record high last Thursday, it marked the first time the occurrence transpired in 17 years.
Stocks in the beaten down banking sector received a boost on Tuesday morning when New York Fed president William Dudley jolted markets with hawkish comments on the likelihood that that the U.S. central bank could lift interest rates before the end of the year. Speaking exclusively with Fox Business, Dudley said the Fed is "getting closer" to that point when it "will be appropriate" to actually raise short-term rates. A rate hike by the Fed this year is viewed as bullish for leading Wall Street banks, as higher interest rates help financial institutions increase their net interest margins.
The top performer on the Dow was Intel Corporation (NASDAQ:INTC), which added 0.22 or 0.62% to 35.13. It came one day after the Philadelphia Semiconductor Index rose sharply to hit its highest level in 16 years. The worst performer was Johnson & Johnson (NYSE:JNJ), which fell 1.90 or 1.55% to 120.41. It came after Kentucky attorney general Andy Beshear announced that the state is filing a civil lawsuit against the company's Ethicon medical device unit for its alleged deceptive marketing of its transvaginal mesh device. Beshear alleged in the suit that approximately 15,000 patients in the state received the implant without getting proper disclosures from Ethicon on the hazards associated with the treatment.
The biggest gainer on the NASDAQ was American Airlines Group (NASDAQ:AAL), which added 0.87 or 2.41% to 36.74. Shares in American Airlines continued to rebound amid heavy profit taking, after the airlines giants reported subdued July traffic and lowered its third-quarter outlook late last week. American Airlines shares are still down more than 18% over the last year. The worst performer was Activision Blizzard Inc (NASDAQ:ATVI), which fell 2.03 or 4.89% to 39.45. Shares in Activision Blizzard (NASDAQ:ATVI) plunged on Tuesday, one day after hedge fund manager John Paulson disclosed in an SEC filing that he is reducing his stake in the video game manufacturer by 68%.
On the New York Stock Exchange, declining issues outnumbered advancing ones by a 2,056-899 margin.