U.S. equity markets retreated on Tuesday as investors pared back riskier, high-multiple technology stocks following a week that saw multiple record highs. The Nasdaq posted the largest decline, falling roughly 2 percent, while the S&P 500 shed about 1.2 percent and the Dow Jones Industrial Average slipped near 0.7 percent. It was the second consecutive session of declines after a rally that pushed major indexes to fresh peaks earlier in the week.

Technology heavyweights led the downturn. Nvidia, which had been buoyed by investor enthusiasm around artificial intelligence partnerships, fell roughly 3.8 percent. Microsoft and Amazon each lost more than 2 percent, while Apple retreated about 1.8 percent. The selloff left investors questioning near-term earnings momentum and the sustainability of lofty growth multiples that had driven large-cap outperformance through September.

Offsetting some of the pressure on markets, energy stocks outperformed, lifting the sector nearly 1.9 percent as crude oil prices climbed. West Texas Intermediate crude rose about 2.3 percent to roughly $89 a barrel on stronger demand signals and tightening supply expectations, supporting names from integrated majors to exploration-and-production firms.

Complicating the market backdrop was a Commerce Department revision to second-quarter real GDP, which Investopedia reported had been raised to a 3.2 percent annualized pace from an earlier 2.4 percent estimate. The upward revision attributed stronger consumer spending and nonresidential fixed investment as key contributors, a development that sent benchmark Treasury yields modestly higher: the 10-year Treasury yield moved toward the 4.1 percent area from about 4.01 percent at Monday’s close.

The combination of firmer growth data and rising yields changed the calculus for investors who had been pricing in a long runway for lower rates after the Federal Reserve’s 25-basis-point cut on Sept. 17. Fed Chair Jerome Powell, in his first public remarks since the rate move, reiterated that future decisions would be "data dependent," a phrase that has market participants parsing economic releases for signs of inflation persistence or cooling.

"This feels like a classic post-rally rotation — profits get taken off the table in the most extended names while cyclical and energy plays catch a bid," said a New York-based portfolio manager. "Stronger GDP increases the odds that the Fed will move more cautiously, which is a headwind for long-duration growth stocks."

Volatility metrics rose in tandem with the equity pullback. The CBOE Volatility Index climbed back above recent lows, signaling a pickup in hedging and shorter-term risk aversion among institutional investors.

Looking ahead, traders will be watching upcoming inflation readings and a string of corporate earnings for further clues. If economic data continue to surprise to the upside, the path for additional Fed easing could narrow, pressuring valuations in richly priced sectors. Conversely, any signs that growth momentum fades could renew the appetite for technology names that have dominated gains this year. The near-term market tone will likely hinge on which narrative — resilient growth or slowing momentum — gains clarity from incoming data.