U.S. stocks fell on Tuesday, weighed by technology and financial shares, as Morgan Stanley downgraded the semiconductor sector and after a shake-up at two big British banks and poor results from Swiss lender UBS.

The market decline came even as Warren Buffett's Berkshire Hathaway agreed to buy Burlington Northern in an acquisition deal that values the railroad company at $34 billion, and is Berkshire's biggest deal ever. Burlington shares surged 28 percent to $97.43.

Financials and technology issues have driven much of the market's recovery, and today's negative developments weighed on sentiment.

The PHLX semiconductor index <.SOXX> fell 2.5 percent after Morgan Stanley downgraded the sector to cautious from attractive, and cut its view on Intel Corp .

The Morgan Stanley note is taking a defensive posture, said Bennett Gaeger, managing director at Stifel Nicolaus in Baltimore. People take profits after such a big run. At this point it looks like Morgan Stanley is just taking some money off the table.

Financials fell after Swiss lender UBS AG posted its fourth consecutive quarterly loss and Britain's Royal Bank of Scotland Plc and Lloyds Banking Group Plc agreed to sell hundreds of branches and key businesses to appease European Union concerns over state aid and competition.

The KBW banks index <.BKX> fell 1.2 percent.

The markets remain lower because overseas markets were weak last night. We're getting some carry-over from that. The markets have been up so much that everyone is suggesting that we're ripe for a correction or a setback, which I think has become a little self-fulfilling, said Charles Lieberman, chief investment officer of Advisors Capital Management LLC in Paramus, New Jersey.

The Dow Jones industrial average <.DJI> dropped 31.44 points, or 0.32 percent, to 9,758.00. The Standard & Poor's 500 Index <.SPX> fell 3.01 points, or 0.29 percent, to 1,039.87. The Nasdaq Composite Index <.IXIC> lost 11.54 points, or 0.56 percent, to 2,037.66.

The day's bright spot came courtesy of Buffett's Berkshire Hathaway Inc's offer to buy railroad Burlington Northern Santa Fe Corp for $100 a share.

Among its peers, Union Pacific Corp gained 5.4 percent to $58.02, and CSX Corp was up 5.4 percent at $45.19. The iShares Dow Jones Transportation Average ETF climbed 4.6 percent to $67.21.

The S&P industrials sector <.GSPI> gained 1 percent.

The Federal Open Market Committee begins around 2 p.m. EST a two-day meeting on interest rate policy and is expected to keep interest rates close to zero.

(Additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)