The Dow Jones industrial average (INDU) fell 69 points, or 0.5%, to end at 13,170. The S&P 500 (SPX) sank 4 points, or 0.3%, to 1,405. The Nasdaq (COMP) slid 4 points, or 0.1%, to 3,074.
The selling came as prices for industrial commodities fell on worries that China, the world's second-largest economy, is headed for a slowdown. Oil prices sank 2.3% and copper prices fell 2%.
Officials in China announced plans to allow gas prices to rise in an effort to compensate for higher oil prices. Meanwhile, home prices were down in major cities across China, according to government statistics.
"There has been a lot of chatter about slowing growth in China," said Ryan Larson, a senior equity trader at RBC Global Asset Management.
Investors were also rattled by reports that the chief executive of mining giant BHP Billiton said China's steel production is slowing, raising fears about the nation's property market.
The selling came despite U.S. government data that showed a big increase in requests for building permits, although initial constructing of new homes declined in February.
"Housing has certainly seen an uptick, but it remains very much a mixed picture," Larson said.
Despite the pullback Tuesday, stocks have been supported recently by rising hopes for the U.S. economy and easing concerns about the debt crisis in Europe.
The dollar strengthened against the euro, the British pound and the Japanese yen.
Oil for April delivery slipped $2.48 to end at $105.61 a barrel.
Oil for May delivery became the active contract at the market close. The contract fell $2.49 to settle at $106.07 Tuesday.
Gold futures for April delivery fell $20.30 to end at $1,647 an ounce.
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