NEW YORK (TheStreet) -- U.S. stock markets finished in the red Tuesday, extending their retreat from recent highs, as investors feared they've been underestimating the odds of an earlier Federal Reserve rate hike and after Apple (AAPL) returned to trading below $100.

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The Dow Jones Industrial Average fell 0.57% to 17,013.87. The S&P 500 shed 0.65% to 1,988.44. The Nasdaq slumped 0.87% to 4,552.29. The S&P pulled back from record levels Monday after five weeks of gains that pushed the benchmark to its 33rd record close of the year on Friday.

"We've never had a market this focused on the Fed, interest rates, and global policymakers. The zero percent at this point is really driving everything. As you get closer to the end of that, you know no longer have that level of safety," said Charlie Bilello, director of research at Pension Partners.

Over the past week, the high-yield credit market, which typically leads the stock market, has continued to display weakness ahead of the Fed's interest rate announcement next week. Instead of hitting new lows, credit spreads have been diverging.

"We know that smart money credit investors are pulling back a bit from the riskiest areas of the market and that tends to be a sign of risk averse behavior," said Bilello.

Apple (AAPL) shares gave up 0.38% to $97.99. Earlier, it hit an intraday high of $103.08 after the tech heavyweight finally introduced its long-anticipated Apple Watch and the next iPhones, dubbed the iPhone 6 and iPhone 6 Plus. The phones will come in two sizes, a 4.7-inch version and a 5.5-inch version, which may allow the company to charge more for a larger phone.

McDonald's (MCD) fell 1.52% to $91.09 after reporting that global same-store sales decreased 3.7% in August, its results damaged by the recent food safety scare in China.

The SPDR Gold Trust ETF (GLD)  rose 0.12% to $120.87. The United States Oil Fund (USO) dipped 0.23% to $34.62.

--By Andrea Tse in New York

Follow @AndreaTTse