NEW YORK (CNNMoney.com) - Stocks fell Tuesday as interest-rate worries knocked the wind out of a brief rally earlier in the session.

The Nasdaq composite (down 19.88 to 2,294.23, Charts) tumbled about 0.8 percent. The Dow Jones industrial average (down 39.06 to 11,235.47, Charts) lost about 0.3 percent, and the Standard & Poor's 500 (down 7.85 to 1,297.23, Charts) index fell about 0.6 percent.

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Stocks got off to a wobbly start before turning higher midday as chip shares charged ahead. But the rally proved to be short-lived and the major gauges gave back their gains and then some.

A sell-off in the bond market pushed Treasury yields higher Tuesday, inverting the yield curve and sparking concerns about more rate hikes ahead.

"Investors are looking toward the bond market," said Larry Peruzzi, senior equity trader at Boston Company Asset Management. "They keep seeing a flat to inverted yield curve, but want to see a normalized yield curve."

A core inflation reading that topped estimates also played into rate worries. The government's index of wholesale prices posted its biggest drop in three years in February, but the so-called "core" Producer Price Index, which excludes volatile food and energy prices, increased 0.3 percent.

After the market close, Nike (Research) said its third-quarter profit jumped 19 percent, but the shoemaker's shares fell in after-hours trading on the Inet electronic network.

Looking ahead, investors are going to concentrate on any economic data that would indicate growth is sustaining at a healthy level, Peruzzi said.

No major economic reports are on tap Wednesday, but investors will be closely watching the government's weekly report on fuel inventories, which is expected to show another buildup in supplies.

As of 5:30 p.m. ET, Nasdaq and S&P futures pointed to a flat open for stocks Wednesday.

Coming off of Monday's lackluster performance, investors didn't seem to know what to do with themselves Tuesday.

Sentiment seemed upbeat around midday as the S&P broke through a technical level, but then worries about rising bond yields came back in focus.

The inverted Treasury yield curve -- which occurs when short-term rates exceed long-term ones -- concerns some investors because it has often signaled an economic slowdown in the past.

Recently appointed Federal Reserve chief Ben Bernanke said Monday the flattening of the yield curve was not a sign of an economic slowdown, but he did little to shed light on the future course of the Fed's interest-rate hiking campaign. (Full story.)

The Fed funds rate, a short-term overnight bank lending rate, currently stands at 4.5 percent, after having been boosted 14 times in a row since June 2004.

Many market observers expect the Fed to raise rates at least two more times, and some see three more hikes in the cards.

Oracle (down $0.10 to $13.62, Research) shares fell slightly as investors expressed some disappointment with the weaker-than-expected database revenue the company reported late Monday.

Chip leader Intel (up $0.16 to $19.78, Research) gained, helping to support the Dow. Fellow semiconductor firm Advanced Micro Devices (up $0.29 to $34.44, Research) rose about 1 percent.

Other Dow gainers included General Motors (up $1.15 to $22.00, Research), which jumped more than 5 percent on hopes that it might be closer to a deal with its union that would provide buyouts to thousands of workers.

On the downside, home builders slipped, falling for a second session. The Dow Jones U.S. Home Construction (down $21.99 to $862.53, Research) index lost about 2.5 percent.

Biotechs also declined, with the Amex Biotechnology index slipping 1.9 percent.

Treasury prices declined, raising the yield on the benchmark 10-year note to 4.70 percent from 4.66 percent late Monday. Treasury prices and yields move in opposite directions.

U.S. light crude oil for April delivery seesawed most of the session. It added 15 cents to settle at $60.57 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery fell $3 to $553.10 an ounce.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by about three to one on volume of 1.5 billion shares. On the Nasdaq, decliners topped advancers two to one on volume of 2.4 billion shares.

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