US equities closed in the red on Tuesday after Federal Reserve officials reinforced expectations that interest rates will remain elevated to combat persistent inflation, sending Treasury yields higher.

The Dow Jones dropped 142.18 points, or 0.27%, to 53,185.86. The S&P 500 fell 0.61% to 7,571.90, and the Nasdaq Composite declined 1.08% to 25,533.65. Technology and growth stocks bore the brunt, with Nvidia down 2.9%, Microsoft off 1.1%, and Tesla losing 2.6%.

Comments from Fed policymakers weighed on sentiment. Officials emphasized that the central bank will keep rates "higher for longer" until there is clear evidence inflation is returning to the 2% target. As a result, the odds of a September rate cut slipped to 29%. The 10-Year Treasury yield rose 7 basis points to 4.78%, and the 2-Year yield ticked up to 5.10%.

The rate pressure hit rate-sensitive sectors. Real Estate (XLRE) fell 1.4% and Utilities (XLU) dropped 0.9%. Banks were mixed: JPMorgan rose 0.3% on expectations of stronger net interest income, while Bank of America slipped 0.6%.

Investors are now eyeing Friday's PCE inflation report and the release of the Fed's July meeting minutes next week for further signals on monetary policy.

DJI -0.27% SPX -0.61% NDX -1.08% 10Y 4.78%