By David Hodari and Akane Otani 

Stocks mostly rebounded from sharp losses Tuesday, as worries about global economic growth and downbeat earnings outlooks from bellwether U.S. companies rippled across markets from New York to China.

Major indexes slumped right after the opening bell, sending the Dow Jones Industrial Average sliding nearly 550 points and putting the Nasdaq Composite on track to close in correction territory. Stocks then pared much of their declines over the rest of the trading day, with the Dow industrials down 0.3%, the S&P 500 off 0.4% and the Nasdaq down 0.3% heading into the final hour of the session.

The back-and-forth in markets added to the recent volatile streak for global stocks. Major indexes in Shanghai, Japan and Hong Kong tumbled Tuesday after Chinese officials moved to ramp up financing for private firms, the latest step they have taken to try to stabilize the country's financial markets and reverse slowing growth.

Tepid outlooks from industrial giants 3M and Caterpillar added to the dark mood Tuesday, although major indexes bounced off their lows after Caterpillar officials said tariffs would have a "quite minor" impact on its results. Earlier, the company had said it would have to raise prices for most of its machines and engines next year to offset rising materials costs as well as tariffs.

Altogether, investors were left with an increasingly muted outlook for the global economy, which has shown signs of sputtering this year after a synchronized expansion last year drove stocks around the world higher. The International Monetary Fund, citing headwinds from protectionist trade policies and instability in emerging markets, earlier in October cut its forecasts for global economic growth for 2018 and 2019.

Even the U.S., which many investors have regarded with more optimism, has shown signs of faltering. Data have indicated some weakness in the housing and auto markets, and a report Friday is expected to show economic growth moderating in the third quarter.

Investors have a "glass half-empty" perspective on the current earnings season, said Ronan Carr, equities strategist at Bank of America Merrill Lynch. "Globally, results haven't been bad, but the companies that miss are getting hammered, and even the ones that beat expectations have been underperforming in the 24 hours after publishing."

As stocks around the world reared back, investors poured money into government bonds and other assets that tend to perform well during volatile stretches.

The yield on the benchmark 10-year U.S. Treasury note was at 3.162%, down from 3.196% Monday. Yields fall as bond prices rise. Gold for October delivery jumped 1% to $1,233.40 a troy ounce, ending at its highest level since July.

Technology shares resumed a recent slide. Shares of fast-growing companies disrupting industries ranging from communications to entertainment had powered much of the stock market's gains in the first half of the year. Yet in recent months, investors have questioned whether the rally had left shares overextended.

That has sent shares of many technology-driven firms tumbling, with Amazon down 0.9% and Nvidia losing 3.9% on Tuesday.

The tech rout also hit Europe, where Austrian semiconductor manufacturer AMS's earnings disappointed investors. The Stoxx Europe 600 fell 1.6%, notching its fifth consecutive daily decline.

Global markets were also pressured by sliding oil prices, which headed for their steepest one-day drop of the month.

U.S. crude oil slumped 4% to $66.56 a barrel, with some analysts attributing the declines to fears about rising supply and others saying the selloff was part of a broader retreat from risky assets that had performed well earlier in the year.

"It's hard to really get out there and find a bullish situation here," said Bob Yawger, director of the futures division at Mizuho Securities U.S.A.

Downbeat U.S. and European trading followed heavy selling in the Asia-Pacific region, where investors reversed the broader market rally that came on Friday and Monday amid anxieties about Chinese economic growth.

Indexes across the region suffered heavy losses, with the main benchmarks in Shanghai, Japan, South Korea and Taiwan slumping 2% or more.

The steep fall in Chinese stocks marked a reversal of the Shanghai index's sharpest two-day rise since 2015, which came as investors parsed reassuring comments by government and central-bank officials about Chinese economic growth.

Coming after government proposals to cut income taxes, analysts are uncertain whether such moves would prevent Chinese growth from decelerating further.

"We're asking whether China is doing stimulus by a thousand cuts, but I'm still very skeptical," said Ian Samson, markets research analyst at Fidelity International. "The ongoing slowdown is quite natural, but it will continue to weigh on global growth."

Stephanie Yang contributed to this article.

Write to David Hodari at David.Hodari@dowjones.com and Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

October 23, 2018 15:49 ET (19:49 GMT)

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