The S&P 500 and Nasdaq Composite recorded their worst day in almost a month on Monday, following a robust survey of business condition in the U.S. service sector

U.S. stock indexes finished sharply lower on Tuesday to build on the previous session’s losses, as Wall Street bank executives warned of possible recession and investors assessed the Federal Reserve’s monetary policy tightening path after better-than-expected economic data.

Wall Street failed to rebound from a poor start to the week after recent stronger-than-expected U.S. economic data raised fears about further interest rate rises by the Federal Reserve.

The S&P 500 and Nasdaq Composite recorded their worst day in almost a month on Monday, following a robust survey of business condition in the U.S. service sector.

Stocks extended losses on Tuesday with the large-cap S&P 500 index logging its biggest two-day selloff in two months. Nasdaq Composite booked its worst two-day performance since early November, according to Dow Jones Market Data.

The U.S. trade data released on Tuesday showed the trade deficit rose 5.4% in October to a four-month high of $78.2 billion. The over 5% increase is a sign of weakening global demand for American goods and services.

This followed Friday’s news that the jobs market was showing few signs that the Fed’s attempts to cool the economy by sharply raising borrowing costs were yet to have a dramatic impact.

John Porter, chief investment officer and head of equity at Newton Investment Management, said what happened to the stock market on Monday was possibly a bit of ‘spillover effect’ from the potentially ‘unjustified optimism’ on Friday.

I was surprised by the market’s behaviour on Friday but not surprised by the way (it) behaved yesterday, because what many investors are focused on is this much discussed notion of the Fed pivot and (they are) trying to figure out when the Fed’s gonna be able to take their foot off the gas, not just a little bit, but completely, said Porter.

Adding to the worries about the Fed will keep lifting interest rates to control price increases and eventually trigger a recession, investors also heard some downbeat economic warnings from top executives at some of the Wall Street’s largest banks.

JPMorgan Chase CEO Jamie Dimon on Tuesday warned that stubbornly high inflation could trigger an economic recession next year as steep prices cause consumer spending to dry up.