US stocks fell on Tuesday after signs of strength in the services sector and comments from Federal Reserve Chairman Ben Bernanke diminished expectations of an interest rate cut, with surging bond yields adding to concerns.
Rate-sensitive stocks, such as utilities, took much of the heat as interest-rate worries spread, with Edison International dropping 1.6 percent. Bernanke said the economy is set to grow at a sluggish pace in coming months, but he warned risks of elevated levels of inflation, excluding food and energy, may not recede.
The Dow Jones industrial average was down 96.63 points, or 0.71 percent, at 13,579.69. The Standard & Poor's 500 Index was down 9.45 points, or 0.61 percent, at 1,529.73. The Nasdaq Composite Index was down 15.33 points, or 0.59 percent, at 2,602.96.
Housing-related stocks fell after Bernanke said the building slowdown is likely to drag on longer than expected. Also weighing were profit warnings from retailer Bed Bath & Beyond Inc and kitchen cabinet maker American Woodmark Corp.