On Tuesday, US stocks fell as Tesla and Apple highlighted slowing demand, raising concerns about what lies ahead for growth stocks and the US economy as the Federal Reserve prepares to raise interest rates further. Treasury bonds rose, and the dollar rose the most in nearly three weeks.

The S&P 500 and the Nasdaq 100 ended the first trading session of 2023 in the red, but recovered to close off session lows. As concerns about iPhone supply grow, Apple's market value has fallen below $2 trillion. Because of dwindling demand, the company has instructed suppliers to produce fewer components for some of its products. Tesla fell after fourth-quarter deliveries fell short of expectations, despite the company offering incentives in key markets.

Treasury yields fell across the curve, with the 10-year yield hovering around 3.78% after briefly touching 3.72%. Oil has dropped the most since November, as mild winter temperatures in several parts of the world have allayed fears of an energy crisis.

Investors, still jittery after their bets on the Fed's path fell short in 2022, anticipate a volatile year of trading as uncertainty about the US economy persists. Fed policy will determine how stocks and bonds perform this year, with some traders already looking for opportunities as risk assets are sold off.

Concerns about a recession lingered, with former New York Fed President William Dudley predicting that an impending slowdown will be mild, while investors pondered the impact of the central bank's tightening on the economy. Investors will be watching the jobs report this week, as the Fed continues to focus on labour market softening.