US Stock Market Today: Dow Jones, Nasdaq, S&P 500 finish choppy session weaker amid rate hike fears

U.S. stocks closed out February in subdued fashion and each of the three major indexes ended with monthly declines, as investors continue to assess whether interest rates will remain high for an extended period of time.

After a strong performance in January, stocks retreated in February as economic data and comments from U.S. Federal Reserve officials prompted market participants to reconsider the odds the central bank would hike rates to a higher level than market forecasts and keep them elevated for longer than was initially expected.

"The market in many ways expected things to go south more quickly, forcing the Fed to pivot, or pause, or cut rates sooner than the Fed was saying," said Johan Grahn, head ETF market strategist at Allianz Investment Management in Minneapolis.

"The staying power of the Fed is much more determined and steadfast than the staying power of investors so it’s back to the old mantra of do you really want to fight the Fed on this and in this case it is still a mistake to try and do that."

The Dow Jones Industrial Average (.DJI) fell 232.39 points, or 0.71%, to 32,656.7, the S&P 500 (.SPX) lost 12.09 points, or 0.30%, to 3,970.15 and the Nasdaq Composite (.IXIC) dropped 11.44 points, or 0.1%, to 11,455.54.

For the month, the S&P 500 fell 2.61%, the Dow slid 4.19% and the Nasdaq shed 1.11%

Traders have started to price in the chances of a bigger 50 basis-point rate hike in March, although the odds remain low at about 23%, according to Fed fund futures, which suggest rates peaking at 5.4% by September, up from 4.57% now.