U.S. stocks closed sharply lower Tuesday as big banks warned that equity markets could be headed for a drawdown, reflecting mounting concerns over stretched valuations.

All three major U.S. stock indexes slid well into negative territory after the CEOs of Morgan Stanley and Goldman Sachs stoked fears of a potential market bubble, with the S&P 500 having climbed to a series of all-time highs, largely powered by the artificial intelligence boom.

Tech shares weighed particularly heavily on the Nasdaq, with AI-related momentum stocks providing the most drag. JPMorgan Chase CEO Jamie Dimon warned last month of the heightened risk of a significant stock market correction within the next six months to two years, citing factors including geopolitical tensions.

"Investors seem a little more worried about valuation than they have in a while, at least today," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

"A lot of these companies' valuations were pretty stretched and their earnings were good, but not great," Carlson added. "And that's a recipe for profit-taking."

The U.S. government shutdown, the result of a congressional impasse, is nearing the record for the longest ever. The resulting dearth of official government data has led to increased scrutiny of private sources such as ADP's National Employment report expected Wednesday.

Urgent: Trump Warns, You’d Better Be Prepared for What’s Coming... See More Here

Comments from Federal Reserve officials are being parsed for clues as to how the data-dependent central bank will forge its monetary policy in the absence of crucial economic indicators.

Local elections for New York's mayor and governors in New Jersey and Virginia will also be closely tracked.

According to preliminary data, the S&P 500 lost 80.22 points, or 1.17%, to end at 6,772.40 points, while the Nasdaq Composite lost 486.09 points, or 2.04%, to 23,348.64. The Dow Jones Industrial Average fell 252.95 points, or 0.53%, to 47,084.99.

Palantir Technologies slid despite the data analytics company's better-than-expected fourth-quarter revenue forecast. Uber fell in the wake of the ride-hailing platform's quarterly profit miss, while Henry Schein advanced after hiking its annual profit forecast.

Spotify and U.S.-listed shares of Shopify both lost ground after their quarterly results.