Stocks closed lower on Tuesday as market participants continued to monitor developments in the banking sector after the sale of Silicon Valley Bank. The Dow Jones Industrial Average fell about 40 points, while the S&P 500 Index and Nasdaq Composite declined roughly 0.2% and 0.5%, respectively.

Here's how the market settled on Tuesday:

S&P 500 Index (SPY  ): -0.16% or -6.23 points to 3,971.30

Dow Jones Industrial Average (DIA  ): -0.12% or -37.43 points to 32,394.65

Nasdaq Composite Index (QQQ  ): -0.45% or -52.76 points to 11,716.08

The banking industry remained in focus Tuesday as Federal regulators testified before the Senate Banking Committee regarding the cause of the collapses of SVB and Signature Bank. Three top regulators each told Congress that they favor more strict rules for banks with more than $100 billion in assets. The House Financial Services Committee will hold its own hearing on Wednesday.

Investors are getting a closer look at the extent of SVB's fallout, with the Federal Deposit Insurance Corporation stating that the bank's fallout has cost its Deposit Insurance Fund about $20 billion.

Meanwhile, BlackRock (BLK  ) warned on Tuesday that the firm expects the Federal Reserve to continue to raise interest rates despite recent bets that the turmoil in the banking sector will lead to a rate hike pause or even cuts.

"We don't see rate cuts this year -- that's the old playbook when central banks would rush to rescue the economy as recession hit," BlackRock said in its weekly client note. "Now they're causing the recession to fight sticky inflation and that makes rate cuts unlikely, in our view."

On the economic front, U.S. home prices cooled in January, rising only 3.8% nationally year-over-year, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. That is down from 5.6% in December and marked seven straight months of decline.

"The Federal Reserve remains focused on its inflation-reduction targets, which suggest that rates may remain elevated in the near-term," said Craig Lazzara, managing director at S&P DJI, in a statement. "Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months."

Elsewhere, consumer confidence improved in March, according to the Conference Board on Tuesday. The board's Consumer Confidence Index ticked higher to 104.2 from 103.4 in February, topping estimates.

In single-stock news, Alibaba (BABA  ) shares rose after the Chinese e-commerce giant said it will split its company into six businesses, each with the ability to go public. Each business will also be managed by its own CEO and board of directors, with the move "designed to unlock shareholder value and foster market competitiveness."

Lyft (LYFT  ) shares dropped after the ride-hailing company named former Amazon (AMZN  ) executive David Risher as its new CEO, with co-founders Logan Green and John Zimmer stepping down from their respective roles of CEO and president.

Apple (AAPL  ) on Tuesday launched its Apple Pay Later service, which will allow users to split purchases into four payments spread over six weeks. Users will be able to manage, track and repay their loans in their Apple Wallet, the company said in a release.

Looking ahead, the banking sector will remain in focus as market participants access testimonies for Fed regulators before Congress for a second day.