Stocks took a sharp downturn on Tuesday as investors grew concerned about a potential delay in the Federal Reserve's plans to cut interest rates. The Dow Jones Industrial Average tumbled 395 points, marking a 1% decrease, after dropping more than 500 points at its lowest point. During the first two days of the second quarter, the blue-chip index had sunk nearly 800 points. The S&P 500 also ended the day down by 0.7%, while the Nasdaq Composite experienced a decline of approximately 1%.

Art Hogan, the chief market strategist at B. Riley Financial, observed that investors seemed eager to secure profits following a strong run, leading them to withdraw funds and allow the market to take a breather.

This decline follows the S&P 500's strongest first quarter performance since 2019. The index gained 10.2% over the first three months of the year, with the Dow and Nasdaq also seeing gains of 5.6% and 9.1% respectively.

The market reacted to fresh data released on Friday, which revealed a faster increase in the Personal Consumption Expenditures price index, the Federal Reserve's preferred inflation gauge, for the 12-month period ending in February than in January. This prompted caution from Fed Chair Jerome Powell, who emphasized that rate cuts would not be immediate, stating, "We don't need to be in a hurry to cut."

Bond yields, another influential factor, experienced an increase this week. The 10-year Treasury yield rose to 4.37% on Tuesday, though it retreated slightly from earlier highs. It still remains around its highest level since November of last year.

Expectations for a rate cut in June were dialed back by traders, from over 70% a week earlier to about 64% according to the CME FedWatch Tool.

Moving forward, investors eagerly await the release of the March jobs report on Friday morning. Economists surveyed by FactSet expect a seasonally adjusted total of 202,500 jobs added in March, down from the 275,000 increase seen in February.

In other news, health insurers faced downturns following the Biden administration's announcement of the final payment rates for Medicare Advantage and Medicare Part D drug coverage for 2025. Payments to Medicare Advantage plans are projected to rise by an average of 3.7%, exceeding $16 billion, taking into account various factors. As a result, Humana shares slid by 13.4%, CVS Health shares declined by 7.2%, and UnitedHealth Group shares also lost 6.4%.

Tesla, the electric vehicle manufacturer, experienced a 4.9% decrease in its shares on Tuesday following the news of its first annual drop in sales since 2020, as the company grapples with mounting competition.

As the trading day winds down, it should be noted that these stock levels are subject to slight changes.