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Consulting firm McKinsey & Co plans to cut about 2,000 jobs in one of its biggest round of layoffs, Bloomberg News reported on Tuesday, citing people with knowledge of the matter.

McKinsey did not immediately respond to a Reuters request for comment.

The Wall Street benchmark indexes tumbled on Tuesday, weighed by megacap names, after data showing a rebound in business activity in February stoked fears that the U.S. Federal Reserve might need to hike interest rates by more than expected to control inflation.

The S&P Global (NYSE:SPGI) Purchasing Manufacturer's index showed that business activity in the United States rebounded to its highest level in eight months in February to 50.2 from 46.8 in January, buoyed by a robust services sector, according to a survey.

The report adds to a recent slew of economic data which has painted a picture of a resilient economy, which continues to perform against a backdrop of multiple rate-rises by the central bank in 2022 aimed at tamping down inflation.

With inflation still far from the Fed's 2% target, and the economy retaining much of its vigor, money market participants have been revising upwards where they see the Fed fund rates peaking - currently at 5.35% in July and staying near those levels throughout the year.

"This (business activity) data doesn't do anything to get rid of the fears that the Fed might be more hawkish and might feel like taking rates higher than what investors were thinking just a month ago," said Brian Jacobsen, senior investment strategist at Allspring Global Investments.

U.S. stocks had an upbeat start to the year after their worst annual showing in more than a decade in 2022, as investors hoped the central bank's rate-hike cycle was nearing its end.

With this positive mindset driving indexes higher, it makes equity markets susceptible to pull-backs when data undermines expectations on what the Fed might do.

Among those hit by this on Tuesday were big tech stocks, with Tesla (NASDAQ:TSLA) Inc, Amazon.com Inc (NASDAQ:AMZN), Microsoft Corp (NASDAQ:MSFT) and Google-parent Alphabet (NASDAQ:GOOGL) Inc falling between 2.1% and 3.9%.

Not helping them was the fact the U.S. benchmark 10-year Treasury notes hit a fresh three-month high. [US/]

Higher yields typically weigh on growth stocks, whose valuations tend to be based on future profits that are discounted heavily as rates go higher.

By 2:09 p.m. ET (1909 GMT), the Dow Jones Industrial Average fell 649.81 points, or 1.92%, to 33,176.88, the S&P 500 lost 78.6 points, or 1.93%, to 4,000.49 and the Nasdaq Composite dropped 268.86 points, or 2.28%, to 11,518.41.

After being an exception to Tuesday's big tech woes during the morning, Meta Platforms Inc (NASDAQ:META) slipped 0.2%. The Facebook parent had initially been buoyed by confirmation it was testing a monthly subscription service called Meta Verified, which will let users verify their accounts using a government ID and get a blue badge.

Elsewhere, Home Depot Inc (NYSE:HD) slumped 6.3% to a three-month low after the No. 1 domestic home improvement chain warned of weakening demand and issued a dour profit forecast for 2023.

Smaller rival Lowe's (NYSE:LOW) Cos Inc fell 5.2% ahead of its results next week.

Walmart (NYSE:WMT) forecast full-year earnings below estimates and painted a grim picture of hotter-than-expected food inflation squeezing profit margins. However, the world's largest retailer recovered from an initial decline to gain 0.8%.

Analysts are expecting earnings of S&P 500 companies to grow by 1.6% in 2023, compared with 4.4% growth estimated at the start of the year, as per Refinitiv data.

All of the major 11 S&P 500 sectors fell, with the consumer discretionary index's 3% decline leading the way.

Almost there; if not today, then probably sometime this week.

The bears’ long-craved take out of natural gas’ $2 support seems only a matter of timing now as the soon-to-expire March and the most-active April gas contracts on the New York Mercantile Exchange’s Henry Hub hit new 2-½ year lows.

March gas sank to $2.057 while April reached $2.165 per mmBtu, or metric million British thermal units.

April itself settled at $2.073, down 17.5 cents, or 7.8%, on the day.

A minor support zone “near $1.98/mmBtu will likely keep prices in a tight range before another breakdown of technical support (that) could potentially send futures lower near $1.80/mmBtu,” Houston-based energy markets research service Gelber & Associates said.

An unusually warm start to the 2022/23 winter season has led to considerably less heating demand in the United States versus the norm, leaving more gas in storage than initially thought.

During the week ended Feb. 10, inventories in U.S. gas storage stood at 2.266tcf, or trillion cubic feet, up 17% from the year-ago level of 1.938 tcf, the Energy Information Administration reported on Thursday.

Responding to the warmth and lackluster storage draws, gas prices plunged from a 14-year high of $10 per mmBtu in August, reaching $7 in December and low-$2 levels this week.

‘Same old, same old’ - That’s the story in oil as U.S. inflation and rate hike concerns continue to be a bugbear for longs in the game.

Crude prices resumed their grind lower on Tuesday as concerns over global growth overwhelmed the optimism some in the market had over the end of COVID controls in top oil importer China.

New York-traded West Texas Intermediate, or WTI, crude for March settled down 18 cents, or 0.2%. at $76.16 per barrel. The U.S. crude benchmark has fallen in three of the past four weeks, losing nearly 7% in that stretch.

London-traded Brent crude for March delivery settled down $1.02, or 1.2%, at $83.05. The global crude benchmark, like WTI, has Brent has slid in three of the past four weeks, losing more than 5% in that period.

“Central banks globally are about to take policy into even more restrictive levels and that is countering China’s reopening momentum,” said Ed Moya, analyst at online trading platform OANDA.

“Crude prices are struggling as global growth concerns return after soft European manufacturing activity data is accompanied with a surge in global bond yields.”

WTI and Brent, which slumped about 4% or more last week, rebounded somewhat in Monday’s scarcely-traded session, with U.S. market participants mostly away for the President’s Day holiday.

With Tuesday’s session back at full strength, traders focused largely on the Federal Reserve’s minutes of its February policy meeting due on Wednesday.

The minutes will provide investors an insight into what Fed policy-makers were thinking when they authorized a second straight slowing of rate hikes since December. The February hike of 25 basis points compared with December’s 50-basis point increase and November’s 75-basis point jump.

Personal income and spending data, due on Friday, will likely keep the Fed on its toes over inflation and the need for accordingly higher rates, analysts say, even after a drop in existing home sales in January.

New York Fed president John Williams is also due to speak about inflation at an event on Wednesday.

That aside, there will be revised data on fourth quarter gross domestic product and a weekly report on initial jobless claims on Thursday.

The slowing in rates over the past two months came before a surprise spike in U.S. inflation readings.

A blowout U.S. non-farm payrolls report for January, released two days after the Fed rate decision on Feb. 1, prompted investors to reevaluate expectations for how high the central bank will ultimately raise rates.

The latest Producer Price Index, issued Thursday, showed that wholesale prices rose by the most in seven months in January.

According to interest-rate futures, the Fed could take rates to peak above 5.2% by July, from a current high of 4.75%.

Since Beijing announced at the start of the year that it was doing away with all COVID controls, the long-oil world has been salivating over what that could mean for demand in the largest importer of the commodity.

Even the Paris-based International Energy Agency, which looks after the interest of oil-consuming nations, has been waxing lyrical about how Chinese buying could exponentially remake this year’s oil market.

The IEA, as it’s called, forecast an additional 500,000 barrels per day of consumption from China this year that would take global oil demand to a record high. “Global oil demand is set to rise by 1.9 million bpd in 2023, to a record 101.7M bpd, with nearly half the gain from China following the lifting of its COVID restrictions,” the agency said in its January market report.

Notwithstanding the positive forecast, the IEA is typically labeled by oil bulls as the “permabear” of demand — due to the agency’s bias towards energy-consuming countries which are often seeking the lowest possible prices.

The problem though with what the long-side of oil wants is there has to be enough hard data to support it.

Analysts say Chinese import data supporting a major oil rally will likely not emerge for at least another two weeks. Meanwhile, latest available data showed the world’s largest crude importer bought 10.98M bpd, or barrels per day, in January, down from December's 11.37M bpd and November's 11.42M bpd.

The government in Beijing declared a “decisive victory” on Friday in its battle against COVID, claiming it had created “a miracle in the history of human civilization” in successfully steering China through the global pandemic. In the absence of hard numbers, such statements could only have a fleeting impact, analysts said.