U.S. stocks fell sharply on Tuesday, extending losses into a second session, as investors fretted slowing economic growth in Europe and the potential impact on coming third-quarter earnings from U.S. corporations.
"We could see a continuation of these 100-plus-point-day moves as investors worry about could this be the end of a three-year run without a correction," said Kate Warne, investment strategist at Edward Jones.
General Motors declined after Morgan Stanley cut its outlook on GM earnings and as the auto manufacturer's fund chief raised the count of those killed in crashes related to defective ignition switches. CF Industries Holdings rallied after Yara International canned its chief executive, saying it was not suited to leading merger discussions with the fertilizer maker.
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"It's heightened concern about the slowdown in global growth, highlighted by the IMF forecast this morning, and whether earnings will keep growing," said Warne of the factors propelling stocks lower.
The International Monetary Fund downgraded its global growth forecast for this year and 2015, with the organization that represents 188 countries now projecting world growth to come in at 3.3 percent in 2014, down 0.1 percent from its July forecast. Next year, it expects growth of 3.8 percent.
"The economic data from Germany and France in particular has been weaker than expected," said James Liu, global market strategist at J.P. Morgan Funds.
German industrial output fell by 4 percent in August, with the worse-than-expected drop coming a day after the country's industrial orders had their largest monthly decline since the global financial crisis in 2009.
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"Our chief concern is how much will the slowdown in the European economy impact the earnings outlook for the third quarter and, more importantly, guidance for the fourth," said Art Hogan, chief market strategist at Wunderlich Securities.
"The dollar is stronger against the euro for a reason," Hogan added.
"The reality is the U.S. on a relative basis is looking a lot better," Nick Raich, CEO of The Earnings Scout, said. But there's a "lot of fear and speculation that a strong dollar and weak growth are going to affect earnings."