Wall Street's main indexes have closed lower on the first trading day of 2023 with big drags from Tesla and Apple, while investors worried about the Federal Reserve's interest-rate hiking path as they awaited minutes from its December meeting.
Shares in electric vehicle maker Tesla Inc hit their lowest level since August 2020 and put pressure on the consumer discretionary sector after missing Wall Street estimates for quarterly deliveries.
Apple Inc shares sank, with the iPhone maker hitting its lowest level since June 2021 after a report from Nikkei Asia pointed to weaker demand.
In addition, an analyst downgraded their rating of the stock due to production cuts in COVID-19-hit China.
The energy sector, which logged stellar gains in 2022, started the year in the red as oil prices fell on bleak business activity data from China and concerns about the outlook for the global economy.
The main US stock indexes had ended 2022 with their steepest annual losses since 2008 following the Fed's fastest pace of rate hikes since the 1980s to stamp out decades-high inflation.
"Even though the calendar has changed, a lot of the main issues for the market have not, specifically with the Federal Reserve tightening monetary policy as it's still concerned about inflation," chief investment officer at Independent Advisor Alliance Chris Zaccarelli said.
"We're in a bear market. Negative is the default reaction to everything," he said.
"Until the Fed really changes their tone, it's an uphill battle for the market."
Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, also cited worries about Apple's demand stemming as well as Tesla's sharp decline for the broader market's weakness on Tuesday.
According to preliminary data, the S&P 500 lost 15.43 points, or 0.40 per cent, to end at 3,824.07 points, while the Nasdaq Composite lost 78.21 points, or 0.75 per cent, to 10,388.28.
The Dow Jones Industrial Average fell 12.33 points, or 0.04 per cent, to 33,134.92.
The S&P 500 had shed 19.4 per cent in 2022, marking a roughly $US8 ($A12) trillion decline in market capitalisation, while the Nasdaq fell 33.1 per cent, dragged down by growth stocks.
Investors on Wednesday will closely monitor the minutes of the Fed's December policy meeting when the central bank raised interest rates by 50 basis points after four straight 75 basis points hikes and signaled rates could stay higher for longer.
Other economic data due this week includes the ISM manufacturing report, also on Wednesday, and December's jobs report on Friday.
Weakness in the labour market could give the Fed a reason to ease its monetary policy tightening but the data so far has shown that market remains tight despite rate hikes.
Money market participants see a 68 per cent chance the Fed will raise the benchmark rate by 25 basis points to 4.50 per cent to 4.75 per cent in February, with the rates peaking at 4.98 per cent by June.