Stocks tumbled on Tuesday as new economic reports impacted optimism over the health of the U.S. economy. The Dow Jones Industrial Average fell nearly 390 points, while the S&P 500 Index and Nasdaq Composite lost about 1.5% and 1.6%, respectively.

Here's how the market settled on Tuesday:

S&P 500 Index (SPY  ): -1.47% or -63.91 points to 4,273.53

Dow Jones Industrial Average (DIA  ): -1.14% or -388.00 points to 33,618.88

Nasdaq Composite Index (QQQ  ): -1.57% or -207.71 points to 13,063.61

In the spotlight, JPMorgan Chase (JPM  ) CEO Jamie Dimon warned that interest rates may need to raise higher as the Federal Reserve continues to combat inflationary pressures and slowing economic growth.

"We have to deal with all these serious issues over time, and your deficits can't continue forever. So rates may go up more. But I hope and pray there is a soft landing," Dimon said in an interview with The Times of India, according to a transcript.

"I ask people in business, 'Are you prepared for something like 7% [benchmark interest rates]?' The worst case is 7% with stagflation," Dimon added. "If they are going to have lower volumes and higher rates, there will be stress in the system. We urge our clients to be prepared for that kind of stress."

Bank stocks including Goldman Sachs (GS  ), Morgan Stanley (MS  ), Citigroup (C  ), Wells Fargo (WFC  ) and JPMorgan all fell Tuesday following Dimon's comments.

Investors have grown concerned this week over ongoing negotiation in Washington over the Congressional budget, with market participants hoping lawmakers pass a new spending package to avert a government shutdown that could take place as soon as Oct. 1. On Monday, Moody's Investors Service said a U.S. shutdown would be "credit negative" for the country's debt.

In economic news, new U.S. home sales were weaker-than-expected in August, according to the Commerce Department's report Tuesday. Homes under contract totaled 675,000 for the month, declining 8.7% from July's print.

Separately, home prices in 20 big cities across the United States were little changed annually in July, according to the S&P CoreLogic Case-Shiller Index released Tuesday. The firms' 20-City Composite index rose by a less-than-expected rate of 0.1% from a year ago, compared to the 1.2% decline seen in June.

Consumer confidence also declined in September, according to the Conference Board's consumer confidence index released Tuesday. Confidence fell to 103 in September, down from 108.7 in August and below estimates for a reading of 105.5.

Beneath the headline, the expectations index fell to 73.7 in September, below August's reading of 73.7 and less than the 80 reading typically associated with recessions.

Elsewhere, the U.S. Federal Trade Commission filed an antitrust lawsuit against Amazon (AMZN  ) Tuesday, claiming that the ecommerce giant maintains "monopoly power" by inflating prices, degrading quality for consumers and curbing competition.

"The upshot here is that Amazon is a monopolist and it's exploiting its monopolies in ways that leave shoppers and sellers paying more for worse service," FTC Chair Lina Khan told reporters at a press briefing Tuesday, quoted by CNBC. "In a competitive world, a monopoly hiking prices and degrading service would create an opening for rivals and potential rivals to come in, draw business, grow and compete, but Amazon's unlawful monopolistic strategy has closed off that possibility, and the public is paying directly as a result."

For Wednesday, market participants will react to Costco's (COST  ) earnings report.