The Dow Jones fell 2.4 percent or more than 800 points to 33,240, while the S&P 500 dropped 2.8 percent to 4,175.
The Nasdaq sunk four percent to close at 12,490 amid a broader sell-off in the sector.
US equities got a reprieve on Monday but then resumed a downward slide that began last week, as expectations that the Federal Reserve’s war on inflation may take interest rates so high it tips the world’s largest economy into a recession.
“The markets continued to grapple with several headwinds including expected Fed aggressiveness moving forward, the ongoing war in Ukraine, inflation pressures, and Covid-related lockdowns in China, and if it portends to an economic slowdown,” analysts at Charles Schwab investment bank said.
Microsoft and Google-parent Alphabet, which were reporting earnings after the close, fell 3.7 percent and three percent, respectively.
Meanwhile, Twitter fell 3.9 percent in the wake of billionaire Elon Musk’s deal to buy the company and take it private.
The generally positive tone to the corporate earnings season has not been enough to allay investor fears.
“There certainly is some concern about the possibility that even if companies report earnings that are above expectations, that there’s going to be a tendency for them to lower guidance going forward,” said Tom Cahill of Ventura Wealth Management. (AFP)