Concerns for U.S. economic environment and companies' ability to sustain double-digit profit growth have sparked market sell-off in the past two sessions, experts have said.
All three major indices were down more than 1.5 percent. The Dow Jones Industrial Average and S&P 500 turned negative for the year while the Nasdaq dropped below 7,000-mark and fell into correction territory.
Tech sector is one of the hardest-hit on Tuesday. The popular "FAANG" stocks -- Facebook, Amazon, Apple, Netflix and Google-parent Alphabet -- lost nearly 1 trillion U.S. dollars in combined market cap after descending more than 20 percent from their 52-week highs.
The Dow component Apple was the biggest contributor to the decline of the benchmark. Its stock price erased 4.78 percent on Tuesday. On Monday, shares of the company dropped nearly 4 percent after reports said the company cut production of orders for the new iPhones that came out earlier this year.
"Apple is good headline to raise concerns. But there is more (to the market sell-off)," said Matthew Cheslock, a trader at Virtu Americas LLC.
Shares of Nvidia plunged 18.76 percent and closed at 164.43 dollars apiece on Friday after the chipmaker's earnings and outlook fell short of Wall Street estimates. The company had since registered three-day losing streak along with other major U.S. chipmakers including Advanced Micro Devices and Micron Technology.
The fact that the market has not seen a fast rebound especially on the tech sector showed investors were concerned about growth trajectory of the companies next year.
"Maybe we should reevaluate our expectations for next year. It's really unsustainable to think that a company can earn 20 or 30 percent quarter over quarter over quarter," said Cheslock, adding that investors have to temper with the fact that a company that grows at an annual rate of 10 percent is still a very good one.
Also grappling with earnings and outlook for next year was the retail sector. The biggest retail news for the day was Target's earnings report that came weaker than expected.
Its adjusted earnings per share stood at 1.09 dollars, lower than the 1.12 dollars expected. Its revenue was 17.82 billion dollars, slightly higher than analysts' expectations.
The company's same-store sales growth, which is a key metric for retailers, stood at 5.1 percent, lighter than forecast.
Its stock price plummeted 10.52 percent on Tuesday. Kohl's and Macy's, also big retailer names, plunged 9.23 percent and 3.42 percent respectively.
Several retailers had to struggle with their performance this year, among them was the 125-year-old Sears. It filed for bankruptcy protection last month with a plan to close 142 more stores countrywide towards the end of the year, casting doubt on the future of retail chains amid their fierce competition with online shopping platforms.
Experts noted that the latest sell-off made it clear that worries about possible economic slowdown still linger.
Sentiment among homebuilders dropped 8 points in November to 60 in the National Association of Home Builders/Wells Fargo Housing Market Index, lowest reading since August 2016. This is largely due to rising mortgage rates and continued home price growth that are hurting affordability.
In addition, U.S. building permits fell 0.6 percent to a rate of 1.263 million units in October. Housing starts increased 1.5 percent in October at a seasonally adjusted annual rate of 1.23 million units but is 2.9 percent below the rate registered in the same period last year.
The continued housing weakness and expectation for one more interest rate hike from the Federal Reserve this year triggered fears over the durability of the economy's strength.
JP Morgan economists expect economic growth to slow down in 2019, to a pace of 1.9 percent for the year, according to media reports on Tuesday.
The economists said the slowdown will come as fiscal, monetary and trade policy get less supportive or more restrictive.