NEW YORK, New York - A major rise in U.S. Treasury yields and a sell-off of financial stocks rocked Wall Street on Tuesday.

U.S. investors and traders were returning to the market after the three-day Martin Luther King holiday weekend.

"The financials crumbling a little bit under the weight of less-than-impressive earnings quarters is probably the biggest factor today," Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana told Reuters Tuesday.

"When you have taken out potentially one of the areas that actually was working here, that kind of casts a pall on the market."

Goldman Sachs tumbled 7 percent after its quarterly earnings fell short of expectations.

The Dow Jones Industrial Average dived 543.34 points, or 1.51 percent, to 35,368.47.

The Standard and Poor's 500 gave up 85.74 points, or 1.84 percent, to 4,577.11.

The Nasdaq Composite slumped 386.86 points, or 2.6 percent, to 14,506.90.

Meantime U.S. Treasury yields rose to two-year highs. "The hot inflation prints have spooked the market that the Fed is going to move and so we are seeing this rise in yields," Mona Mahajan, senior investment strategist at Edward Jones was quoted as saying by Reuters.

"It's not only the rise in yields but the rapid rise in yields ... that really does cause some indigestion in the market, but particularly in growth, higher valuation, more speculative asset classes," Mahajan said.

The U.S. dollar was sharply higher among a range of currencies. The euro dropped to 1.1323 by the New York close Tuesday. The British pound sank to 1.3594. The Swiss franc eased to 0.9171. The Japanese yen rose to 114.60.

The Canadian dollar was unchanged at 1.2511. The Australian dollar inched down to 0.7185. The New Zealand dollar was steady at 0.6767.

On overseas equity markets, the German Dax was off 1.01 percent. The Paris-based CAC 40 lost 0.94 percent. In London, the FTSE 100 fell 0.63 percent.

On Asian markets, the Nikkei 225 in Japan was down 76.27 points or 0.27 percent at 28,257.25.

China's Shanghai Composite gained 28.25 points or 0.80 percent to 3,569.91.

The Australian All Ordinaries was basically flat, down 3.50 points or 0.05 percent at 3,569.91.

In Hong Kong, the Hang Seng fell 164.93 points or 1.04 percent to close Tuesday at 15,768.79.