U.S. equities closed lower on Tuesday as investors mulled over the prospects of tighter monetary policy and the House Republicans' legislation to repeal and replace Obamacare.
"This is typical of a market that is re-assessing why it went into orbit," said Peter Cardillo, chief market economist at First Standard Financial. "That's why you're seeing the market not do much of anything."
The Dow Jones industrial average pulled back about 30 points with Chevron contributing the most losses. The 30-stock index moved just 69.28 points in the session. The S&P 500 declined 0.3 percent, with energy leading decliners. The two indexes also recorded their first two-day losing streak since January.
The S&P 500 declined 0.3 percent, with energy leading decliners. The two indexes also recorded their first two-day losing streak since January.
"We may actually be on the cusp of some sort of consolidation of the incredible gains we've seen post election," said Peter Boockvar, chief market analyst at The Lindsey Group, in a note.
He also pointed out that the number of New York Stock Exchange issues that closed at a 52-week low outnumbered those that closed at a 52-week high on Monday.
The Nasdaq composite slipped 0.26 percent. The three major indexes tried for gains earlier in the session.
IBB 5-day chart
The GOP health care proposal includes killing the requirement that most Americans must have health insurance or pay a fine, among other changes.
"Skyrocketing premiums, soaring deductibles, and dwindling choices are not what the people were promised seven years ago," House Speaker Paul Ryan said in a statement after the plan was unveiled on Monday night.
The iShares Nasdaq Biotechnology ETF and SPDR S&P Biotech ETF fell more than 1 percent on Tuesday after President Donald Trump tweeted he was working on a "new system where there will be competition" in the drug industry.
@realDonaldTrump I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!
"Investors could have reacted similarly to when Trump tweeted about health care previously," said Mike Bailey, director of research and chair at FBB Capital Partners. "But his tweet could be more bark than bite."
Investors also looked ahead to the February jobs report, which is scheduled to release on Friday. Economists polled by Reuters expect the U.S. economy to have added 186,000 jobs last month.
"The expectation is that wages will increase in the report," said Quincy Krosby, market strategist at Prudential Financial. "If they do, that will give the Fed the final greenlight for a rate increase in March."
"The issue is not so much the rate hike in March. The markets are trying to predict how many rate hikes there will be this year," Krosby added.
Market expectations for a rate hike held around 85 percent Tuesday, according to the CME Group's FedWatch tool. The Fed's monetary policy committee is set to meet between March 14 and 15.
The yield on the benchmark 10-year Treasury notes, which moves inversely to price, was higher at around 2.51 percent on Tuesday.
In economic news, the Commerce Department said on Tuesday the U.S. trade deficit jumped in January to the highest level in nearly five years to $48.5 billion.
Stocks in the U.S. are coming off a record-setting week after a speech from Trump lifted expectations that the administration's agenda — especially regarding tax reform and deregulation — could become reality in the near future.
"No one can argue that the market has been positive in its receiving of the new policies in Washington, said Rob Lutts, chief investment officer at Cabot Wealth Management.
He also said he expects the market to continue going higher, adding he sees more room to run for big banks. "I think [the SPDR S&P Bank ETF] is going to be a strong performer because of the steepening yield curve."
On Monday, stocks declined slightly as the reality of an interest rate hike in March sunk in.
On the earnings front, Brown-Forman and Dick's Sporting Goods are among the companies that reported before the bell. The sporting goods retailer earned an adjusted $1.32 per share for its latest quarter, 2 cents a share above estimates, while Brown-Forman reported earnings on that missed expectations but beat on revenue.
In Europe, the pan-European Stoxx 600 index closed 0.27 percent lower on Tuesday. In Asia, the Shanghai Composite in China closed 0.27 percent higher, while the Nikkei in Japan closed 0.18 percent lower.
The Dow Jones industrial average fell 29.58 points, or 0.14 percent, to close at 20,924.76, with Chevron leading decliners and Intel outperfoming.
The S&P 500 declined 6.92 points, or 0.29 percent, to end at 2,368.39, with energy leading nine sectors lower and information technology and utilities the only risers.
The Nasdaq dropped 15.25 points, or 0.26 percent, to close at 5,833.93.
About three stocks declined for every advancer at the New York Stock Exchange, with an exchange volume of 793.32 million and a composite volume of 3.5 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 11.5.
—The Associated Press contributed to this report.
On tap this week:
8:15 a.m. ADP payrolls
8:30 a.m. Productivity and costs
10:00 a.m. Wholesale trade
7:45 a.m. European Central Bank rate decision
8:30 a.m. ECB President Mario Draghi briefing
8:30 a.m. Jobless claims
8:30 a.m. Import prices
Earnings: The Buckle, Vail Resorts
8:30 a.m. Employment report
2:00 p.m. Federal budget
—CNBC's Dan Mangan and Fred Imbert contributed to this report.