Dow sinks 470 points as higher yields, Tesla dampen sentiment

Tesla also tumbled 5.0% after the automaker missed market expectations for first-quarter deliveries.

The Dow and S&P 500 closed lower on Monday after stronger-than-expected manufacturing data from the Institute for Supply Management (ISM) raised doubts over the Fed's three interest rate cuts it had outlined at the last policy meeting.

"ISM creeped above 50 for the first time in 17 months and that should be a good thing, it shows resiliency of the U.S. economy," said Hugh Anderson, managing director at HighTower Advisors in Las Vegas, but since it diminishes hopes of rate cuts in June, "the market is taking it in a negative fashion."

"Right now, the fundamentals are supportive of rates staying where they are and possibly even nudging higher."

The CBOE Volatility index, also known as Wall Street's 'fear gauge', touched an over two-week high.

Data on Tuesday showed new orders for U.S.-manufactured goods rebounded more than expected in February, while U.S. job openings held steady at higher levels.

Now the focus is on Friday's U.S. non-farm payrolls data, which is likely to show job additions slowed in March although average earnings ticked higher compared to the previous month.

Traders are pricing in a near 57% chance of the Fed cutting interest rates by at least 25 basis points in June, down from 64% just a week ago, as per CMEGroup's FedWatch tool.

A slew of Fed officials including New York Fed President John Williams, Cleveland Fed President Loretta Mester and San Francisco President Mary Daly are scheduled to speak later in the day.

Shares of UnitedHealth, CVS Health and Humana fell between 7.5% and 14.1% as the U.S. government kept reimbursement rates for providers of Medicare Advantage health plans unchanged, in a setback to insurers.

At 11:56 a.m. ET, the Industrial Average was down 469.83 points, or 1.19%, at 39,097.02, the S&P 500 was down 52.53 points, or 1.00%, at 5,191.24, and the Composite was down 216.89 points, or 1.32%, at 16,179.95.

Nine of the 11 major S&P 500 sectors were trading lower, with the health care index, down 1.9%, on track for its biggest percentage drop of the year.

Calvin Klein-parent PVH Corp's shares tumbled 23.3% after the retailer forecast an about 11% drop in first-quarter revenue. Peer Ralph Lauren dropped 5.1%.

Cryptocurrency and blockchain-related stocks dropped, tracking an over 6% fall in bitcoin. Exchange operator Coinbase, bitcoin investor MicroStrategy and crypto miner Riot Platforms fell between 3.5% and 8.0%.

Declining issues outnumbered advancers for a 3.77-to-1 ratio on the NYSE and for a 3.40-to-1 ratio on the Nasdaq.

The S&P index recorded 22 new 52-week highs and 3 new lows, while the Nasdaq recorded 39 new highs and 93 new lows.