US stocks fell sharply on Tuesday to close lower after President Donald Trump said he was calling off negotiations with Democratic lawmakers on coronavirus relief legislation until after the election.

Stocks were higher before the remarks, but reversed course after Trump made the comments on Twitter.

Stocks fell to a session low shortly after the tweet, taking the S&P 500 down more than 2% from its session high.

"Much of the rally we've seen in the last week in particular was based on hopes for an additional stimulus package," said Robert Phipps, director at Per Stirling Capital Management in Austin, Texas. "There's now a whole lot less reason to put money to work before the election."

Unofficially, the Dow Jones Industrial Average fell 381.15 points, or 1.35%, to 27,767.49, the S&P 500 lost 48.15 points, or 1.41%, to 3,360.48 and the Nasdaq Composite dropped 179.31 points, or 1.58%, to 11,153.18.

Earlier in the session, Federal Reserve Chair Jerome Powell warned that the US economic recovery remained far from complete.

Powell said the domestic rebound could still slip into a downward spiral if the coronavirus is not effectively controlled and growth sustained.

Hopes that a stimulus deal was still possible had helped to recoup losses from last week that were sparked by the news that Trump had contracted COVID-19.

Consumer discretionary shares were among the biggest weights on the S&P 500.