US equity indexes fell as investors weighed a slump in allocation to US equities in an influential Bank of America (BAC) survey with expectations from the Federal Reserve's rate-setting meeting that began Tuesday and industrial production increasing more than forecast.

The Nasdaq Composite sank 1.7% to 17,502.2, with the S&P 500 falling 1.2% to 5,607.5 and the Dow Jones Industrial Average trading 0.8% lower at 41,499.7 after midday Tuesday. All but three sectors, energy, real estate, and healthcare, fell intraday. Communications services, consumer discretionary, and technology led the decliners.

A closely monitored Bank of America (BAC) survey of global fund managers, with 171 participants polled in March, showed a 40-point drop in allocations to US equities month-over-month. The monthly slump is reportedly a record decline that strategists at the investment bank called "bull crash."

Meanwhile, the Fed's two-day policy meeting beginning Tuesday is widely expected to hold interest rates steady, as per the CME FedWatch tool, after taking into account the state of the labor market and inflationary pressures in the economy.

In economic news, US industrial production rose by 0.7% in February, compared with expectations for a smaller 0.2% increase in a survey compiled by Bloomberg, and following a downwardly revised 0.3% increase in January.

Redbook US same-store sales rose by 5.2% from a year earlier in the week ended March 15, slower than a 5.7% year-over-year increase in the previous week.

In company news, Alphabet's (GOOG, GOOGL) Google on Tuesday agreed to acquire cybersecurity startup Wiz in an all-cash deal worth $32 billion, as the technology giant looks to bolster its cloud security operations.

West Texas Intermediate crude oil futures fell 0.5% to $67.22 a barrel.