Wall Street closes lower as Fed worries persist

STORY: U.S. stocks closed lower on Tuesday in a volatile session as traders assessed fresh economic data after the long Labor Day weekend.

The Dow fell half a percent. The S&P 500 fell four tenths of a percent, while the Nasdaq finished about three quarters of a percent lower - marking the index's seventh consecutive day of losses, its longest losing streak since November 2016.

A survey from the Institute for Supply Management showed the U.S. services industry picked up in August for the second straight month, fueling expectations that the Federal Reserve will keep raising interest rates to tame inflation.

Kevin Nicholson is global fixed income chief investment officer at Riverfront Investment Group.

"The stock market is trying to figure out whether or not yields rising in the fixed income market is actually saying that growth is going to slow down or whether or not the Fed is going to hike 50 basis points or 75 basis points. So I think right now the stock market is trying to figure all of those questions out even though most people have it baked in that the Fed is going to raise 75 basis points. But with yields rising as fast as they are on the fixed income side, I think that there's a question of whether or not growth is going to slow down more than folks originally thought."

Rate-sensitive shares of Amazon.com and Microsoft both fell over 1% as benchmark Treasury yields rose to their highest levels since June.

Shares of Apple also lost ground ahead the debut of its new lineup of iPhones at the company's annual keynote event set for Wednesday.

Shares of Bed Bath & Beyond fell more than 18%, days after the struggling retailer's chief financial officer fell to his death from New York City skyscraper in what was later ruled a suicide. An interim CFO was announced on Tuesday.

And shares of Digital World Acquisition Corp tumbled more than 11% after Reuters reported the blank-check acquisition firm that agreed to merge with former U.S. President Donald Trump's social media company failed to secure enough shareholder support for an extension to complete the deal.