Video source: YouTube, CNBC Television

By Devik Jain and Ambar Warrick, Sinéad Carew

Wall Street's main indexes closed lower on Tuesday after Federal Reserve Chair Jerome Powell signaled that the U.S. central bank would consider speeding up its withdrawal of bond purchases as inflation risks increase, piling pressure onto a market already nervous about the latest COVID-19 variant.

In a testimony before the Senate Banking Committee, Powell indicated that he no longer considers high inflation as "transitory" and that the Fed would revisit the timeline for scaling back its bond buying program at its next meeting in two weeks. read more

"Powell's comments threw a monkey in the wrench in market thinking in terms of potential taper timing. You're seeing as a result of that, risk-off across the board," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

"You also have to factor in the Omicron variant concerns. You can argue whether they're more headline risk or reality risk but regardless, it's having a significant impact on oil, and everything that's tied to economic growth."

Powell's comments also prompted speculation among some investors about a potential acceleration in interest rate hikes.

"The principal contributor to the decline in stock prices today is the Powell commentary, regarding the upcoming Fed meeting, about accelerating the tapering of their bond buying program, which obviously leads to the prospect that rate hikes come sooner next year," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

"That somewhat hawkish shift in tone caught the market flatfooted," Luschini said.

Meanwhile, the market was also left waiting for information about how dangerous the Omicron variant might be, the degree to which current vaccinations could offer protection and the additional restrictions governments might have to impose that could hurt the economy, Luschini said.

According to preliminary data, the S&P 500 lost 87.25 points, or 1.87%, to end at 4,568.02 points, while the Nasdaq Composite lost 239.43 points, or 1.52%, to 15,543.40. The Dow Jones Industrial Average fell 648.13 points, or 1.84%, to 34,487.81.

The declines were broad-based, with all the 11 major S&P sectors down. Communication services was the lead decliner by late afternoon. As oil prices tumbled energy were also under pressure throughout the session. read more

Tuesday's decline was a reversal after Monday's rally in which stocks regained some of the ground they had lost on Friday when the market first sold-off on news of the virus variant.

"The market is clearly in some treacherous waters right now. You've had two significant pullbacks out of the last three trading days. This is certainly shaking some of the complacent longs in the market," said Wedbush's James.

While the Food and Drug Administration said it hopes to have information about the effectiveness of current COVID-19 vaccines against Omicron, vaccine companies appeared divided.

BioNTech's (BNTX) chief executive said the BioNTech and Pfizer (PFE) COVID-19 vaccine will likely offer strong protection against severe disease from the variant, while Moderna Inc's (MRNA) CEO told the Financial Times that COVID-19 shots are unlikely to be as effective against the new variant as they have been previously. read more

Moderna shares fell while Regeneron Pharmaceuticals Inc (REGN) were also under pressure after it said its COVID-19 antibody treatment and other similar drugs could be less effective against Omicron. read more

Travel and leisure stocks slumped, with S&P 1500 Airlines and the S&P 1500 Hotels, Restaurant and Leisure indexes both declining on concerns of more border restrictions.

The small-cap Russell 2000 index also fell.

The virus uncertainty has triggered fresh alarm at a time when supply chain logjams are weighing on economic recovery and central banks globally are contemplating a return to pre-pandemic monetary policy to tackle a surge in inflation.

Meanwhile, data showed U.S. consumer confidence slipped in November amid concerns about the rising cost of living and relentless COVID-19 pandemic. read more

Reporting by Devik Jain and Ambar Warrick in Bengaluru; Editing by Marguerita Choy and Sriraj Kalluvila.

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Sources: Reuters, CNBC Television