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The markets sustained heavy selling in late-afternoon action on Tuesday. Economically-sensitive sectors took the biggest thrashing, while defensives outperformed the broader markets. 

Today's Markets

The Dow Jones Industrial Average fell 101 points, or 0.75%, to 13458, the S&P 500 dipped 15.3 points, or 1.1%, to 1442 and the Nasdaq Composite slumped 43.1 points, or 1.4%, to 3118.

The S&P 500 took its biggest one-day drop since June. The broad-market average is now on a four-day losing streak. Traders also snatched up U.S. Treasury bonds in a move into safer assets, knocking the yield on the 10-year down 0.034-percentage point to 1.684%.

The financial, technology, materials, industrial and consumer discretionary sectors sustained the heaviest losses on the day. Meanwhile, safety plays like utilities and health-care stocks performed the strongest. 

The markets stared the day off in the green on the back of strong data, but then commentary from a senior Federal Reserve official weighed heavily on sentiment. 

Philadelphia Federal Reserve President Charles Plosser said Tuesday that additional easing from the central bank "is neither appropriate nor likely to be effective in the current environment." He went on to say that uncertainty caused by fiscal policymakers across the board are keeping business leaders from making investments. 

The closely-watched S&P/Case Shiller composite index of 20 metropolitan areas showed home prices rose 1.6% in July  from June on a non-seasonally adjusted basis, a smaller increase then the 1.8% expected. Prices were up 1.2% from a year ago, more than the 1% expected.

The data come as more upbeat news for the housing market that has been showing signs of improvement recently. Analysts frequently cite the housing market as a major hindrance to the broader economy, so improving data there could be seen as bullish for the markets. 

"Home prices remain a long way from pre-crash levels, but the long-awaited recovery has begun and appears to be spreading to more areas of the country," Nomura's Ellen Zentner and Roiana Reid wrote in a note to clients. 

The Conference Board's reading on consumer confidence rose to 70.3 in September from an upwardly revised 61.3 in August, topping estimates for a reading of 63. The reading was the highest since February.

In corporate news, Caterpillar (CAT) sliced its full-year 2015 profit outlook to a range of $12 to $18 a share, lower than a previous forecast of $15 to $20 a share. Shares of the blue-chip heavy machinery maker fell more than 1% on the news. 

Staples (SPLS) unveiled a new strategic plan that involves closing 60 stores and selling its European printing business. The company will take up to a $1.2 billion pre-tax charge this year, but expects to see $250 million annually by the end of 2015.   

Oil futures continued sliding after sliding more than 1% in the prior session. The benchmark contract traded in New York fell 27 cents, or 0.17%, to $91.66 a barrel. Wholesale New York Harbor gasoline jumped 1.2% to $2.953 a gallon. 

In metals, gold climbed $2, or 0.12%, to $1,767 a troy ounce. 

Foreign Markets

The Euro Stoxx 50 gained 0.41% to 2568, the English FTSE 100 rose 0.36% to 5860 and the German DAX climbed 0.16% to 7425.

In Asia, the Japanese Nikkei 225 edged up by 0.25% to 9092 and the Chinese Hang Seng inched higher by 0.02% to 20699.

Follow Adam Samson on Twitter @adamsamson.