Wall Street stocks retreated on Tuesday as markets monitored ongoing trade talks ahead of new tariff hikes set to take effect later this week.

US stocks initially looked poised to extend Monday's rally, but soon tumbled into negative territory.

"We're struggling for direction right now," said Adam Sarhan of 50 Park Investments. "After a big move up over the last few weeks, it's perfectly normal and healthy to see the market consolidate or go sideways a little bit."

The Dow Jones Industrial Average finished down 0.1 percent at 44,111.

The broad-based S&P 500 dropped 0.5 percent to 6,299, while the tech-rich Nasdaq Composite Index shed 0.7 percent to 20,916.

US President Donald Trump told CNBC he plans fresh tariffs on imported pharmaceuticals and semiconductors.

The statement comes before a separate set of tariff hikes goes into force on dozens of economies later this week. Swiss officials travelled to Washington on Tuesday to try to strike a last-minute deal.

Sarhan said investors are adjusting to a weakening economic outlook after last week's July jobs report pointed to slowing in the labour market.

On the positive side, "a weaker economy could mean more rate cuts from the Fed," Sarhan said.

Among individual companies, Palantir Technologies jumped 7.8 percent after reporting its first quarter with more than US$1 billion in revenues. The data analysis and artificial intelligence company also raised its full-year revenues forecast.

Pfizer was another big winner after earnings as the drugmaker reported a big increase in profits to US$2.9 billion behind higher sales of Covid-19 products and lower expenses. (AFP)