The declining performance of the three major Wall Street indices followed a flat close in Europe and slipping shares in Asia.
"It was such a strong opening to the month yesterday that investors could be short-term focused and saying, 'Let's take some of the profits that we saw yesterday,'" said Sam Stovall, chief investment strategist at CFRA Research in New York.
March began with a bang on Monday as global equities markets rose, the S&P 500 had its best day since June 5 and bond markets calmed after a month-long selloff.
Wall Street ended lower on Tuesday, pulled down by Apple Inc and Tesla, while materials stocks climbed as investors waited for the U.S. Congress to approve another stimulus package.
The Dow Jones Industrial Average fell 143.99 points, or 0.46%, to 31,391.52, the S&P 500 lost 31.53 points, or 0.81%, to 3,870.29 and the Nasdaq Composite dropped 230.04 points, or 1.69%, to 13,358.79.
The pan-European STOXX 600 index rose 0.19% while MSCI's gauge of stocks across the globe shed 0.51%.
Emerging market stocks lost 0.21%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.35% lower, while Japan's Nikkei lost 0.86%.
The European Central Bank should expand bond purchases or even increase the quota earmarked for them if needed to keep yields down, ECB board member Fabio Panetta said on Tuesday, after weeks of steady increases in borrowing costs.
Australia's central bank on Tuesday affirmed its pledge to keep interest rates at historic lows as policymakers battle to stop surging bond yields from disrupting the country's surprisingly strong economic recovery.
After a sharp selloff last week, U.S. Treasuries have stabilized with bond market indicators and derivatives positioning pointing to near-term calm. But an improving economy could trigger another slide in their prices.
U.S. Federal Reserve Governor Lael Brainard said she was closely watching bond markets and would be concerned if a recent rise in yields continued and began to constrain economic activity.
"Some of those moves last week and the speed of the moves caught my eye," Brainard said on Tuesday.
Yields on the benchmark 10-year Treasury bond have stabilized after hitting a one-year high of 1.614% last week. Benchmark 10-year notes last rose 11/32 in price to yield 1.4085%, from 1.446% late on Monday.
Gold prices rose, inching up from a more than eight-month low, as a retreat in the dollar and U.S. Treasury yields lifted demand for the safe-haven metal.
Spot gold added 0.7% to $1,735.41 an ounce. U.S. gold futures settled up 0.6% at $1,733.60.
The dollar index fell 0.263%, with the euro up 0.33% to $1.2087.
Earlier, the dollar was up for a fourth consecutive day after the spike in bond yields challenged the market consensus for dollar weakness in 2021. But riskier currencies rose as bond markets calmed and stocks recovered.
Bitcoin fell 2.55% to $47,640.44 after rising nearly 7% on Monday.
Shares in mainland China and Hong Kong fell overnight after a top regulatory official expressed concerns about the risk of bubbles bursting in foreign markets.
Oil prices largely shrugged off expectations that OPEC would agree to raise oil supplies at a meeting this week.
"The recovery is looking really good to us," Occidental Petroleum Chief Executive Vicki Hollub said. "If you look at what's happening in India as well as the U.S., I think the oil industry is looking like things will be pretty good for us over next couple of years."
U.S. crude futures settled down 89 cents at $59.75 a barrel, while Brent futures fell 99 cents to settle at $62.70 a barrel.
(Reporting by Suzanne Barlyn; Editing by Dan Grebler)
By Suzanne Barlyn
