Worries about the economy held sway as Obama adviser Laura Tyson talked about a potential second government stimulus plan. The market has been retreating lately from its three-month surge based on speculation economy would recovery later this year. Traders are now worried the recovery will be slow.

Tech and energy shares were among the biggest losers, with the latter group weighed down by lower crude oil prices as investors worried that the weak economy will curb demand for commodities.

On Tuesday, the 30-stock Dow Jones industrial average finished lower by 161.27 points, or 1.94%, at 8,163.60. The broad Standard & Poor's 500-stock index was down 17.69 points, or 1.97%, at 881.03. The tech-heavy Nasdaq composite index fell 41.23 points, or 2.31%, to 1,746.17.

On the New York Stock Exchange, 24 stocks were lower in price for every seven that advanced. Breadth on the Nasdaq was 20-6 negative.

Treasuries were up after a $35 billion auction of three-year notes. The dollar index was higher. Gold futures eased.

There were no major economic reports scheduled for release Tuesday. Traders were awaiting second-quarter earnings reports for guidance.

In company news Tuesday, the Justice Dept. has begun looking into whether large U.S. telecommunications companies such as AT&T Inc. (T) and Verizon Communications Inc. (VZ) are abusing the market power they have amassed in recent years, according to people familiar with the matter. The review, while in its early stages, is an indication of the Obama administration's aggressive stance on antitrust enforcement, according to the article.

Shares of IntercontinentalExchange (ICE) and CME Group (CME) were down Tuesday after the Commodities Futures Trading Commission [CFTC] announced that hearings will be held this summer to consider position limits for commodities of finite supply. Also, the CFTC may mandate increased transparency about the nature of market participants.

Goldman Sachs Group (GS) may lose its investment in a proprietary trading code and millions of dollars from increased competition if software allegedly stolen by a former employee gets into the wrong hands, a prosecutor said. Bloomberg News reports Sergey Aleynikov, an ex-Goldman Sachs computer programmer, was arrested July 3 after arriving at Liberty International Airport in Newark, New Jersey, U.S. officials said. Aleynikov, 39, who has dual American and Russian citizenship, is charged in a criminal complaint with stealing the trading software.