(Reuters) - Wall Street sold off on Tuesday, with the S&P 500 closing at the lowest level since July 7, amid growing concern over the impending U.S. presidential election and prospects for higher U.S. interest rates.

Stocks pared losses after falling steeply in early afternoon trading as the S&P 500 breached a key technical level.

The tumultuous presidential race between Democrat Hillary Clinton and Republican Donald Trump has appeared to tighten in the past week after news that the FBI was investigating more emails as part of a probe into Clinton’s use of a private email system.

“There is concern over Trump being unexpected, because the market has really priced in a Clinton win and it hasn’t priced in a Trump win at all,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.

The selloff in equities comes as the Federal Reserve holds its two-day policy meeting, with its statement due on Wednesday. While traders do not expect the central bank to raise interest rates just a week ahead of the presidential election, they are looking for signs confirming that the Fed is set to hike rates in December.

Real estate .SPLRCR, telecommunications .SPLRCL and utilities .SPLRCU stocks - sectors that tend to perform poorly in rising rate environments - sold off especially sharply.

“It’s really hitting the dividend-yielding names harder than anything else...,” said Stephen Massocca, chief investment officer at Wedbush Equity Management LLC in San Francisco. “I don’t know if there is a new ‘taper tantrum’ sort of building here on concerns the Fed will act in December and the whole low interest rate environment is about to change.”

“Taper tantrum” refers to the period in 2013 when markets were rattled by the prospect of the Fed gradually reducing its stimulus program.

The S&P 500 .SPX lost 14.43 points, or 0.68 percent, to 2,111.72, its biggest single-day percentage drop since Oct. 11.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. October 31, 2016. REUTERS/Brendan McDermid

The Dow Jones industrial average .DJI fell 105.32 points, or 0.58 percent, to 18,037.1, and the Nasdaq Composite .IXIC dropped 35.56 points, or 0.69 percent, to 5,153.58.

The CBOE Volatility Index .VIX, a gauge of near-term investor anxiety, jumped to almost a two-month high.

Investors also pointed to the S&P 500 breaching an important technical level as reason for stocks steepening their slide in afternoon trading.

“It started with Trump and the election uncertainty, and with the decline you broke through some important levels,” said Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis, citing the 2,120 level on the S&P 500 that had been the lower boundary of a four-month trading range.

That level was tested in mid-September and mid-October, which underscored its importance as a technical support for the index.

With Tuesday’s decline, the S&P 500 is up only 3.3 percent for the year.

In earnings news, Pfizer PFE.N fell 2 percent after the drugmaker trimmed its profit forecast.

Tronc TRNC.O dropped 12.4 percent after Gannett GCI.N, the publisher of USA Today, abandoned plans to buy the publisher of the Chicago Tribune and the Los Angeles Times. Gannett fell 2.3 percent.

U.S.-listed shares of Valeant Pharmaceuticals VRX.NVRX.TO soared 33.7 percent after a report that the drugmaker is in talks to sell its stomach-drug business.

Declining issues outnumbered advancing ones on the NYSE by a 3.21-to-1 ratio; on Nasdaq, a 2.29-to-1 ratio favored decliners.

The S&P 500 posted 5 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 30 new highs and 152 new lows.