US stocks fall as worries persist over the Fed keeping rates higher for longer

• US stocks fell Tuesday as the shortened trading week starts off with ongoing worries about interest rates.
• Walmart and Home Depot also offered cautious outlooks.

Stocks fell on Tuesday as the holiday-shortened week kicked off with ongoing concern about the Federal Reserve keeping interest rates elevated as well as a warning from Morgan Stanley that stocks could crash within months.

The S&P 500 was on course for a third consecutive loss. The index last week slipped 0.3%, marking a second straight weekly decline. Markets were still feeling the weight of outlooks from Fed officials last week that more interest rate hikes may be needed to further tame inflation.

Minutes from the Federal Reserve's policy meeting in February will be released on Wednesday.

Investors returned from Monday's Presidents' Day holiday with downbeat outlooks from retailers Walmart and Home Depot. Walmart's earnings beat Wall Street's expectations for its holiday quarter, but the company warned softer spending by consumers could hurt its profit margins.

Here's where US indexes stood at the 9:30 a.m. opening bell on Tuesday:

• S&P 500: 4,044.75, down 0.84%
• Dow Jones Industrial Average: 33,589.28, down 0.70% (237.41 points)
• Nasdaq Composite: 11,647.63, down 1.18%

Investors were also considering a warning from Morgan Stanley's Mike Wilson that stocks could crash by 26% over the coming months after surging to unsustainable highs.

The bank's chief US equity strategist said Sunday he sees similarities between current valuations and the "death zone" in Mt. Everest, representing the excessive levels that stock prices have climbed to since 2023 started.

Here's what else is happening today:

• FTX customers in Japan can retrieve their money from frozen accounts as the local subsidiary becomes the first to restart withdrawals.
• The Fed may hike interest rates another three times this year, said Goldman Sachs.
• Adani stocks have now fallen below $100 billion in market value after a short-seller attack.
• The "Canadian Warren Buffett" warned tech stocks are more overvalued than during the dot-com bubble and he foresees a painful sell-off.

In commodities, bonds, and crypto:

• West Texas Intermediate crude picked up 0.8% to $76.91 per barrel. Brent crude, the international benchmark, rose 0.7% to $83.60.
• Gold fell 0.3% to $1,845.50 per ounce.
• The 10-year Treasury yield picked up 6 basis points to 3.89%.
• Bitcoin lost 1% at $24,572.15.