Wall Street suffered losses Tuesday as investors await word about another potential interest rate increase coming from the Federal Reserve's policy meeting.

The Dow Jones Industrial Average experienced a decline of 1.08%, dropping by 367 points. Similar drops were observed in the S&P 500 (1.16%) and the Nasdaq Composite (1.08%).

The drops came as central bankers meet to decide if another interest rate hike is needed to cool inflation. Analysts suspect another 25 basis-point rate hike is in the works when the FMOC's meeting concludes Wednesday.

The latest economic data indicates a U.S. economy that is slowing but not at the rate required to reach the Fed's targeted 2% annual inflation rate. Forecasts are optimistic that May's rate hike will be the Fed's last.

"We think it will be the last rate hike of this tightening cycle," Ned Davis Research chief strategist Joe Kalish said. "The Fed, however, will want to preserve its optionality — just in case the economic data doesn't come in as expected before the next FOMC meeting (in June)."

The Fed's balancing act involves trying to steer the economy clear of a potential recession. The latest data points to the economy slipping into a mild recession in the second half of 2023, which has many investors maintaining a defensive posture.

Other factors weighing on Wall Street is Monday's announcement by Treasury Secretary Janet Yellen that the federal government could reach its debt limit by the end of the month. President Joe Biden is scheduled to meet with House Speaker Kevin McCarthy next week to discuss ways to avert a default and a possible economic catastrophe.