Wall Street ended lower on Tuesday, with the S&P 500 extending its losing streak to four sessions as skittish investors fretted over Federal Reserve hikes and further talk of a looming recession.
Meta Platforms Inc dragged down markets with its shares falling 6.8% after European Union regulators ruled that the company should not require users to agree to personalized ads based on their digital activity.
Technology names suffered as investors cautioned against high-growth companies whose performance would be sluggish in a challenging economy. Apple Inc, Amazon.com Inc and Alphabet Inc fell by between 2.5% and 3%, while the tech-heavy Nasdaq fell for a third straight session.
Most of the 11 major S&P sectors declined, with energy and communications services joining technology as leading laggards. The defensive sector, often preferred during times of economic uncertainty, was the only exception, gaining 0.7%.
Economic growth prospects were in focus on Tuesday after comments from financial titans pointed out that there were uncertain times ahead.
Bank of America Corp.'s chief executive predicted three quarters of mild negative growth next year, while JPMorgan Chase and Co's CEO Jamie Dimon said that inflation will erode consumer spending power and that a mild to more pronounced recession is likely to occur.
Their comments came after recent views from BlackRock and others that believe that the US Federal Reserve'sFederal Reserve's aggressive monetary tightening to combat stubborn price rises could cause an economic downturn in 2023.
David Sadkin, president of Bel Air Investment Advisors, said the market is very reactive right now.
He said that markets are moving up and down right now based on the latest headlines, while markets traditionally reflect the future.
There were strong data on jobs and services sector in recent days that led to a re-evaluation by traders of what path future interest rate hikes will take.
Money market bets point to a 91% chance that the US central bank will raise rates by 50 basis points at its Dec. 13 -- 14 policy meeting, with rates expected to peak at 4.98% in May 2023, up from 4.92% estimated on Monday before service sector data was released.
The S&P 500 rallied 13.8% in October and November on hopes of smaller rate hikes and better-than-expected earnings, although Fed expectations could be undermined by further data releases, including producer prices due out on Friday.
The market got ahead of itself at the end of November, but then we got some good economic data, so people are evaluating what the Fed is going to do next week, according to Bel Air's Sadkin.
The Dow Jones Industrial Average fell 350.76 points, or 1.03%, to close at 33,596. The S&P 500 lost 57.58 points, or 1.44%, to finish at 3,941. 26 and the Nasdaq Composite dropped 225.05 points, or 2%, to end on 11,014. Oil prices have weighed on the direction of global growth with US crude CLc 1 falling to levels last seen in January, before Russia's invasion of Ukraine disrupted supply markets. The energy sector fell 2.7% on Tuesday.
Banks are one of the most sensitive stocks to the economic downturn, because they could be affected by bad loans or slowing loan growth. The S&P banks index fell 1.4% to its lowest close since October 21.
The volume on the US exchanges was 11.01 billion shares, which is in line with the average for the full session over the last 20 trading days.
The S&P 500 posted three new 52 week highs and nine new lows, the Nasdaq Composite posted 52 new highs and 262 new lows.