Bank stocks were a bright spot in the markets, as the Dow Jones industrial average shed about 85 points on Tuesday.
Financials was the only positive sector in the S&P, with the SPDR Financials Sector ETF trading up about 0.4 percent Tuesday afternoon. KeyCorp and SunTrust Banks were big gainers in that group, climbing more than 2 percent each. Tuesday's gains, however, haven't been enough to push the financials sector into positive territory for the year. The financials ETF was still negative for the year by about 0.31 percent.
Anticipation for an interest rate hike continued to build, leading up to the Federal Reserve's upcoming meetings in November and December. Richmond Federal Reserve President Jeffrey Lacker — a known proponent for raising rates and a non-voting member of the FOMC this year — said Tuesday there was a strong case for raising interest rates, arguing that borrowing costs may need to rise significantly to keep inflation under control.
Financials also found support from gains in shares of Deutsche Bank. The embattled bank's stock made some gains Tuesday, trading up as investors await the Justice Department's decision regarding a settlement with the bank regarding its investigations related to mortgage securities.
— CNBC's Evelyn Cheng and Chris Hayes contributed to this report.