Wall Street fell sharply on Tuesday as investors worried that President Donald Trump will struggle to deliver promised tax cuts that propelled the market to record highs in recent months, with nervousness increasing ahead of a key healthcare vote. The S&P 500 and Dow Jones Industrial Average were on track for their worst one-day percentage drops since Trump's election victory in November.
The S&P financial index dropped 2.43 percent and was on track for the biggest daily fall since June. That added to losses in the sector since the Federal Reserve last week raised interest rates by 25 basis points and signalled it would remain on a gradual pace of hikes, a less aggressive stance than some investors expected.
Banks benefit from higher interest rates and their stocks are sensitive to changes in expectations of how quickly the Fed will change rates.
Bank of America slumped 5.07 percent, the biggest drag on the S&P 500, while a 2.7 percent drop in Goldman Sachs pulled the Dow lower.
"There was a feeling the Fed was going to possibly be more hawkish last week. That didn't happen," said Mark Kepner, managing director at Themis Trading in Chatham, New Jersey. "That takes a little out of the higher rates that the banks want."
The Russell 2000 index of smallcap stocks was down 2.03 percent, on pace for its worst day since September.
The financial sector has been the best performing of the 11 major S&P sectors since Trump's election, surging nearly 20 percent on his proposals to cut bank regulations and reduce taxes.
The Dow Jones Industrial Average was down 0.81 percent at 20,737.44 points, while the S&P 500 lost 0.88 percent to 2,352.6, on track for its fourth down session.
The Nasdaq Composite dropped 1.25 percent to 5,827.86.