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(CNN) --
US markets plunged on Tuesday.
The Dow fell some 650 points, or 1.9%, in early afternoon trading as a sell-off in stocks continued, fueled by fears of an economic slowdown.
The drop comes after a brief recovery on Monday.
Large-cap tech stocks lead the losses as investors await key corporate earnings reports this week.
First-quarter results from Microsoft and Google's parent company Alphabet are due out on Tuesday after the markets close.
The Nasdaq, where technology companies have great weight, plummeted about 2.6%, going even further into bearish territory.
For its part, the S&P fell 1.6%.
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The effect of Fed policy on the Dow
After Federal Reserve Chairman Jerome Powell signaled last Friday that aggressive interest rate hikes are likely next month, the Dow fell about 980 points, or 2.8%.
The Fed's hikes are intended to tackle rising inflation, but investors are more concerned that a rise in interest rates will dampen consumer spending and the housing market, ushering in a recession.
Fast-growing technology stocks are closely linked to Fed decisions. These interest-rate sensitive companies have high price-to-earnings ratios because they are typically valued based on future earnings and do not pay dividends.
Higher rates mean future benefits are worth less than they are now.
Cyclical stocks also fell on Tuesday.
The Dow 3M component fell nearly 3%, as did shares of UPS, although both companies beat earnings expectations.
General Electric plunged more than 11% after warning that its outlook for 2022 "trends towards the lower end of the range."
Asian markets fell on Tuesday as economic lockdowns in China, a result of its zero-Covid-19 policy, disrupted global supply chains.
China is a big customer of the US semiconductor and tech market.
Investors also remain concerned about geopolitical turmoil linked to Russia's invasion of Ukraine.
A senior Russian official said Tuesday that the threat of nuclear war is real.
The CNN Business Fear & Greed Index, which measures seven indicators of market sentiment, fell Tuesday in fear mode.
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