Wall Street shares have fallen sharply, with financial companies suffering the biggest declines.
The Dow Jones and S&P 500 indexes were down about 2.5% at mid-day, while the Nasdaq sank almost 3%.
The fall came as a closely-watched financial measure caused alarm about US economic prospects.
Increasing doubts that talks between the US and China would lead to an easing of trade tensions also helped to reverse Monday’s rise.
The declines in share prices extended several weeks of market turbulence.
On Monday, the share indexes closed only slightly up on the year as a whole, despite hitting record highs earlier in the summer.
Analysts said the trigger for Tuesday’s falls appeared to be concerns about the “yield curve”, which measures the difference between the interest rates paid on short-term and long-term US bonds.
The gap has narrowed in recent months, as investors demand higher rates of return on short-term debt in anticipation of inflation and rate rises.
At the same time, they are accepting relatively lower rates on long-term debt, in anticipation of limited inflation and slower economic growth over the next decade.
The difference between the rates on three-year and five-year debt disappeared on Monday.
The move fuelled concerns on Tuesday that the same might happen to the gap between two-year and 10-year bonds – a more significant indicator.
Researchers have found that changes in the yield curve often signal recession.
Analysts at S&P Global Ratings said they expected US economic growth to slow, not necessarily contract, in coming months, as a boost from recent tax cuts and increased government spending fades.
However, the firm added that the risk of recession had grown, reflecting “increased volatility” in financial markets.
On Tuesday, shares in financial companies, which are especially exposed to interest rates, were hardest hit, with firms such as JP Morgan Chase, Goldman Sachs, American Express among the biggest losers on the Dow.
Companies at risk in the trade battle, including Apple and aerospace giant Boeing, also suffered declines, amid scepticism that the US and China would retreat from their tariff war.
“It was good while it lasted,” said Fiona Cincotta, senior market analyst at City Index, referring to Monday’s rally.
Tweets by US President Donald Trump fed the doubts, as he sent conflicting signals in a series of Twitter posts.
“President Xi and I want this deal to happen, and it probably will. But if not remember… I am a Tariff Man,” he wrote.