Stocks across various sectors experienced a decline on Tuesday as investors grew uncertain about their optimistic expectations for Federal Reserve rate cuts. The market downturn was partly influenced by the comments made by Federal Reserve Gov. Christopher Waller, which indicated a lack of urgency in reducing rates.

According to Waller, the Federal Reserve will not initiate rate cuts until there is a reasonable assurance that inflation is consistently near the targeted 2% mark. Consequently, market participants adjusted their projections, resulting in the CME's FedWatch tool showing a decrease in the probability of a rate cut in March from almost 77% last week to 65%.

Ian Lyngen, BMO's head of U.S. rates strategy, noted that Waller's remarks align with the type of information that would prompt a reconsideration of near-term policy expectations. However, Lyngen also observed that these comments did not significantly differ from previous statements made by the Federal Reserve. He suggested that the market sell-off may be a result of profit-taking after a strong performance in 2023.

Among the companies affected by Tuesday's decline, Boeing experienced a particularly significant drop, exerting additional pressure on the Dow. The decline in Boeing shares followed a downgrade issued by Wells Fargo analyst Matthew Akers. This downgrade came after an Alaska Air Group-operated 737 MAX 9 had to make an emergency landing due to a blown-out door plug mid-air.

As investors grapple with the uncertainties surrounding Federal Reserve rate cuts and company-specific events, market volatility is likely to persist in the near term. Traders and analysts will continue to closely monitor any developments that may impact market sentiment and guide future investment decisions.