The stock market experiences a decline as investors worry about the impact of potential Fed rate hikes on economic growth.

On Tuesday, the stock market experienced a decline, with Federal Reserve Governor Lael Brainard hinting at a more assertive strategy for the central bank in tightening its monetary policy.

On Tuesday, the Nasdaq Composite led the declines, dropping 2.26% to 14,204.17 and giving up its 1.9% gain from the previous session. The Dow Jones Industrial Average lost 280.7 points, or 0.8%, closing at 34,641.18. Meanwhile, the S&P 500 fell 1.26% to 4,525.12 after posting two straight days of gains.

According to Mark Zandi, the chief economist at Moody's Analytics, the stock market will face tough times in the near future as it adjusts to the slowing economy and the actions of the Federal Reserve.

The decline in tech stocks was led by chip stocks, with Nvidia dropping 5.2% and AMD losing more than 3%. Some investors think that tech companies may suffer the most from the Fed's hiking campaign, as they may be less attractive to investors who prefer stocks with steady profits over growth shares with uncertain earnings in the future.

On Tuesday, sectors such as utilities and health care experienced gains, with drugmakers and staples also rising slightly. Additionally, cruise stocks saw increases of over 2% and 1%, respectively.

According to Keith Lerner, co-CIO and chief market strategist at Truist, the market's behavior today calls for a defensive playbook, with commodities-linked sectors performing better and technology underperforming due to concerns about high interest rates. There is also worry about the economy and the Fed's ability to navigate a soft landing.

The stock market took a turn for the worse after Brainard, a typically dovish Fed member, suggested that the central bank should quickly reduce its balance sheet to combat inflation.

She stated that inflation is excessively high and is vulnerable to upward fluctuations, while emphasizing the need for the Fed to maintain a steady rate of hikes.

Since May 2019, the 10-year Treasury yield has not been higher than 2.56%, which it reached following her comments.

On Tuesday, recessionary fears persisted among investors, prompting Deutsche Bank to become the first major Wall Street bank to predict a U.S. recession in the near future. The bank attributed this forecast to the Federal Reserve's decision to become more aggressive in its efforts to combat inflation.

According to the bank's economists, the US economy is predicted to experience a significant impact from the Fed's additional tightening in late 2023 and early 2024. This is expected to result in two negative quarters of growth and a rise in US unemployment rate of more than 1.5%, which qualifies as a recession, although a moderate one.

During a speech at the United Nations Security Council, Ukrainian President Volodymyr Zelenskyy called for a Nuremberg-like tribunal to hold Russia accountable for alleged war crimes, as the Russia-Ukraine war continues.

On Tuesday, West Texas Intermediate and Brent crude futures both experienced a decline in price. Specifically, WTI settled 1.28% lower at $101.96, while Brent crude futures fell 0.83% to settle at $106.64. The market has been volatile since the start of the war, with concerns over supply disruptions contributing to the instability.

The Federal Reserve meeting minutes, which are set to be released on Wednesday, are eagerly anticipated by investors as they provide insight into the central bank's decision to raise interest rates for the first time in years and its plans for six additional hikes in 2023.

The first-quarter corporate earnings season is about to start next week, and investors are getting ready for it.

— CNBC’s Patti Domm contributed reporting