Wall Street indexes closed lower with weakness in megacap growth companies such as Apple Inc and the chip sector weighing on the Nasdaq ahead of this week's crop of economic data and remarks from Federal Reserve Chair Jerome Powell.

The U.S. services industry saw slower growth in February, as employment declined, while a measure of new orders hit a six-month high, indicating underlying strength in the sector.

There have been 525 basis points worth of interest rate hikes from the Fed since March 2022, according to reports.

New orders for U.S.-made goods fell more than expected in January, according to another survey.

The tech sell-off, according to some analysts, was a result of a sector that had recently risen, having climbed by 56 percent in 2023.

“Maybe some people are taking chips off the table, taking some profits in the high-flying areas, in conjunction with what is probably justified nerves before Powell speaks and before we get the big slew of labor market data," says Kevin Gordon, senior investment strategist at Charles Schwab.

Apple shares came under pressure after a research report showed iPhone sales in China fell 24 percent year-on-year in the first six weeks of 2024, as Apple faced increased competition from domestic rivals such as Huawei.

Advanced Micro Devices hit a roadblock in its efforts to sell an AI chip tailored for the Chinese market, as Washington tightens restrictions on advanced technology exports to Beijing. Chip rivals fell in sympathy with the Philadelphia Semiconductor index, which was underperforming the broader market.

Fehr also attributed Tuesday's weakness to recent rallies. The benchmark S&P 500 hit a new intraday record high before closing slightly lower.

Along with Powell's testimony before lawmakers on Wednesday and Thursday, investors are also anxiously awaiting more clues about interest rate policy from economic data, including the crucial non-farm payrolls report.