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Also read: U.S. stocks ended a Manic Monday in the green — but intraday bounces like this aren’t bullish

What drove markets?

Stocks sank Tuesday, with all three major benchmarks falling after Monday’s rally.

“Investors are not necessarily secure” in the strength of the market, with “fragility” on display since the beginning of the year, said Aoifinn Devitt, chief investment officer at Moneta, in a phone interview Tuesday. “There is this fear of slowing growth.” 

The CBOE Volatility Index
VIX
jumped to around 33 on Tuesday, according to FactSet data. That compares with a 200-day moving average of around 21.

Consumer discretionary
XX:SP500,
information technology
XX:SP500
and communication services
XX:SP500
were the hardest hit sectors of the S&P 500 on Tuesday, according to FactSet data. Tech and communications services had posted the strongest performance for the S&P 500 in Monday’s stock market rally.

“Now we have this giveback today,” said Devitt. “Markets are trying to figure out a level.”

The S&P 500 ended Tuesday slightly above its closing low this year of 4,170.70 on March 8, according to Dow Jones Market Data. The tech-laden Nasdaq Composite saw its lowest close since Dec. 14, 2020.

Stocks fell as investors waded further into the busiest week of the U.S. company-earnings reporting season, digesting results from a number of corporate heavyweights released before the opening bell. They were also looking ahead to results from megacap tech companies Microsoft Corp.
MSFT
and Google parent Alphabet Inc.
GOOG,
which reported after the closing bell.

Tech giants are “big movers in the market,” said Paul Nolte, a portfolio manager at Kingsview Investment Management, by phone Tuesday. Both the S&P 500 and Nasdaq are “dramatically impacted by tech.” 

Jitters around tech were amplified by the performance of formerly high-flying Netflix
NFLX
shares, which have dropped more than 40% since announcing last week that it had lost 200,000 subscribers in the first quarter.

While around 80% of companies so far reporting earnings for the quarter have beaten profit expectations, including General Electric Co., United Parcel Service Inc. and Pepsico Inc., disappointing earnings forecasts are weighing on shares.

Read: First major Wall Street bank to call for a recession now sees clear outside risk it could be `more severe’

In U.S. economic data, orders at U.S. factories for durable goods rose 0.8% in March and business investment rebounded after the first decline in a year, signaling the economy is still growing at a steady pace. The rise in durable-goods orders matched the consensus expectation produced by a survey of economists by The Wall Street Journal.

 A survey of consumer confidence dipped in April to 107.3 from 107.6, but Americans signaled they are optimistic enough about the economy to keep buying big-ticket items such as news cars and appliances.

The S&P CoreLogic Case-Shiller 20-city house price index posted a 20.2% year-over-year gain in February, up markedly from 18.9% the previous month, but U.S. new-home sales decreased 8.6% to an annual rate of 763,000 in March, the government said Tuesday. 

The Federal Reserve’s policy meeting next week is meanwhile weighing on investors, who are anticipating the central bank may announce a large rate hike, potentially of 50 basis points, in an effort to tame hot inflation, according to Nolte.

“The Fed will raise rates until something breaks, and that will be the economy,” he said. “Concerns may be rising for the potential for a recession.”

Which companies were in focus?

• Twitter Inc.
  TWTR
  shares fell 3.9% Tuesday to $49.68 after its board agreed Monday to accept Tesla chief Elon Musk’s $54.20 a share bid for the social-media platform.

• 3M Co.
  MMM
  shares dropped nearly 3% after the maker of post-it notes and industrial equipment posted better-than-expected first-quarter earnings.

• Shares of PepsiCo Inc.
  PEP
  dipped 0.25% after delivering earnings and revenue that exceeded Wall Street forecasts.

• United Parcel Service Inc.
  UPS
  shares fell 3.5% after the package-delivery giant reported first-quarter profit and revenue that beat expectations.

• General Electric Co.
  GE
  shares plunged 10.3% after the industrial conglomerate reported first-quarter adjusted profit and revenue that beat expectations, but missed on free cash flow and provided a somewhat downbeat outlook.

• Shares of JetBlue Airways Corp.
  JBLU
  plummeted 11.4% after the air carrier reported a narrower-than-expected loss and revenue that more than doubled to match forecasts, but said it planned to reduce capacity growth further to help restore operational reliability. United Airlines Holdings Inc.
  UAL
  said Tuesday it is launching the biggest transatlantic expansion in its history with 30 new or resumed flights coming from mid-April through early June. United Airline shares fell 4.8%.

How did other assets fare?

• The yield on the 10-year Treasury note
  BX:TMUBMUSD10Y
  fell 5.2 basis points to 2.773%. Yields and debt prices move opposite each other.

• The ICE U.S. Dollar Index
  DXY,
  a measure of the currency against a basket of six major rivals, was up 0.6%.

• Bitcoin
  BTCUSD
  was down 5.3% at around $38,018.

• Oil futures
  CL
  ended higher, with West Texas Intermediate crude for June
  CLM22
  delivery climbing 3.2% to settle at $101.70 a barrel.

• Gold futures
  GC00
  closed higher, with gold for June delivery
  GCM22
  rising 0.4% to settle at $1,904.10 an ounce.

• In European equities, the Stoxx Europe 600
  XX:SXXP
  closed 0.9% lower, while London’s FTSE 100
  UK:UKX
  gained 0.1%.

• In Asia, the Shanghai Composite
  CN:SHCOMP
  fell 1.4%, while the Hang Seng Index
  HK:HSI
  rose 0.3% in Hong Kong and Japan’s Nikkei 225
  JP:NIK
  gained 0.4%.

—Steve Goldstein contributed to this report.