Dow falls more than 600 points as market's wild ride continues

U.S. stocks fell Tuesday, a day after one of the biggest comebacks on record for the major averages.

The Dow Jones Industrial Average lost about 660 points, or 1.9%. The S&P 500 dropped 2.4%, while the tech-heavy Nasdaq Composite fell 2.8%.

General Electric was the biggest drag on the S&P 500 with a 6.4% loss after the company topped quarterly earnings expectations, but missed revenue estimates.

American Express and Lockheed Martin were among the top gainers on the benchmark index after earnings beats, respectively rising 3.1% and 1.5%.

The Dow on Monday rallied from a more than 1,100-point loss to close up higher and snap a six-day losing streak. The Nasdaq Composite reversed a 4.9% decline from earlier in the day to finish positive — its biggest rebound since 2008. The S&P 500 also rallied from major losses to close up.

History shows a sharp intraday comeback for the Nasdaq Composite does not typically signal the end of the sell-off, but rather marks volatility seen at the start of a down period, according to Bespoke Investment Group analysis.

"I don't think it's done," Liz Young, head of investment strategy at SoFi, told CNBC's "Squawk Box" on Tuesday. "This ... is a digestion process of a new environment that we're not conditioned for."

Even after Monday's comeback, the S&P 500 is down 7.5% in January, on pace for its worst month since March 2020 at the onset of the pandemic.

The 10-year Treasury yield has climbed this year as the Federal Reserve tightens its monetary policy and prepares to hike interest rates. Investors have rotated out of high-growth areas of the market in favor of safer bets. The Nasdaq Composite is in correction territory, down 16% from its intraday record.

"Downside risks from monetary tightening are higher vs history. The pain has so far been localized to high valuation stocks, but signs of a broader risk-off are brewing," Barclays' Maneesh Deshpande said in a note Tuesday.

The Fed's two-day policy meeting begins Tuesday as investors look for updates on when the central bank will raise interest rates and by how much. Market participants expect the Fed to signal a rate hike as soon as March and more policy tightening on the table to address high inflation.

Investors also monitored geopolitical tension at the Russia-Ukraine border. President Joe Biden spoke with European leaders Monday amid fears of a possible Russian invasion of Ukraine.