Wall Street slips amid focus on Trump's tax bill

Wall Street's main indexes have slipped and government bond yields risen as investors closely watched a pivotal debate over US President Donald Trump's tax-cut bill that has fanned concerns about the country's growing debt.

The gate-keeping House Rules Committee scheduled an unusual 1am ET hearing that is expected to run well into daylight hours, as Republicans try to overcome internal divisions about cuts to the Medicaid health program and tax breaks in high-cost coastal states.

Non-partisan analysts say the proposed plan could add $US3 trillion to $US5 trillion ($A4.7 trillion to $A7.8 trillion) to the federal government's $US36.2 trillion in debt.

"(We're seeing) the American exceptionalism narrative unwind, so you have a natural process of something weakening after years of concentration," said David Russell, global head of market strategy at TradeStation.

"We're kind of pouring gasoline on the fire with tariffs and all of this budgetary uncertainty."

In early trading on Tuesday, the Dow Jones Industrial Average fell 352.28 points, or 0.83 per cent, to 42,324.96, the S&P 500 lost 31.84 points, or 0.54 per cent, to 5,908.62 and the Nasdaq Composite lost 97.35 points, or 0.51 per cent, to 19,045.36.

All 11 S&P sub-sectors traded lower, with information technology and consumer discretionary amongst the worst hit.

US bonds have been under pressure since the start of the week, when Moody's downgraded the country's sovereign credit rating.

On Wednesday, yields on the 30-year note were back up to 5.01 per cent and the benchmark 10-year yield climbed 5.2 basis points to 4.53 per cent.

Highly valued technology stocks weakened as rising rates tend to discount the present value of future profits.

Amazon, down 1.5 per cent, led losses among top megacap and growth stocks.

UnitedHealth Group dropped 5.1 per cent as a Guardian report said the healthcare conglomerate secretly paid nursing homes thousands in bonuses to help reduce hospital transfers for ailing residents.

HSBC also downgraded the stock to "reduce" from "hold".

On the earnings front, retailer Target fell 6.7 per cent after slashing its annual forecast due to a pullback in discretionary spending.

Wolfspeed tumbled 66.5 per cent following a report that the semiconductor supplier was preparing to file for bankruptcy within weeks.

US stocks closed lower on Tuesday, with the S&P 500 snapping a six-day winning streak while the Dow logged its first decline in four sessions.

Despite the losses, they have had a solid month so far.

The S&P 500 has climbed more than 17 per cent higher from its April lows, when Trump's reciprocal tariffs roiled global markets.

A pause in the tariffs, a temporary US-China trade truce and tame inflation data have pushed equities higher although the S&P 500 is still about 3.0 per cent off its record highs.

Brokerage Morgan Stanley upgraded its stance on US equities to "overweight," saying the global economy was still expanding, albeit slowly, amid policy uncertainty.

Declining issues outnumbered advancers by a 3.93-to-1 ratio on the NYSE and by a 2.98-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and no new lows while the Nasdaq Composite recorded 16 new highs and 17 new lows.