The major Wall Street indexes declined on Tuesday as signs of a slowing economy increased concerns about a recession. Market expectations changed for a pause in the Federal Reserve’s interest rate hikes in May.

The number of job postings in the United States in February fell to its lowest level in over two years, indicating a softening in the labour market as industrial orders dipped for a second consecutive month.

Following both sets of data, which were analyzed to determine the economy’s health and to uncover trends that indicate when interest rates will increase in the wake of a recent financial crisis, stocks experienced volatility.

Recent data on Monday had also pointed to weakening U.S. manufacturing activity.

According to Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, “there is already a lot of fear due to the issues that the banks have encountered and the anticipated tightening of credit.”

“When you pair that with poor economic data, the Fed is suddenly relegated to the back page and economic data is elevated to the front page.”

The top losers on the S&P 500 were industries with a strong economic connection, including industrials, materials, and energy.

There were only a few significant sectors in the black, mostly in defensive stocks like healthcare and utilities, which are thought to hold up better during an economic slowdown.

The Fedwatch tool from CME Group (NASDAQ:CME) shows that traders’ bets are weighted towards a pause by the Fed in May, with probabilities of a 25-basis point rate hike at 39.8%, down from nearly 60% before the data.

Despite the day’s losses, the S&P 500 and the tech-heavy Nasdaq have increased by about 7% and 16% in 2023, stabilising from their biggest yearly losses since the 2008 financial crisis.

At 11:41 a.m. ET, the S&P 500 was down 22.74 points, or 0.55%, at 4,101.77, while the Nasdaq Composite was down 55.37 points, or 0.45%, at 12,134.08. The Dow Jones Industrial Average was down 214.15 points, or 0.64%, at 33,387.00.

Virgin Orbit Holdings Inc. had a 23.4% decline in value after declaring Chapter 11 bankruptcy due to its inability to obtain long-term funding.

Shares of movie theatre chain AMC Entertainment (NYSE:AMC) Holdings Inc fell 22.3% after it agreed to address legal matters and convert its preferred stock into common shares.

The SPAC connected to former US President Donald Trump postponed releasing its annual financial report, causing shares of Digital World Acquisition Corp to drop 7.9%.

With a ratio of 2.82 to 1 on the NYSE and 2.51 to 1 on the Nasdaq, declining issues outweighed advancing ones.

The Nasdaq achieved 53 new highs and 169 new lows, compared to the S&P index’s 12 new 52-week highs and nil new lows.