U.S. stocks ended sharply lower Tuesday, as a selloff in the technology sector fueled a rout that wiped out much of Monday’s sizable gains.

Recent weakness has been attributed to concerns over a potential trade war between China and the U.S. as investors assess the likelihood of any protectionist policies and the impact of any retaliatory measures from trading partners.

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, -1.43% dropped 344.89 points, or 1.4%, to 23,857.71, with 25 of its 30 members finishing in negative territory.

The S&P 500 index SPX, -1.73% declined 45.93 points, or 1.7%, to 2,612.62, with seven of its 11 main sectors closing lower. The S&P 500 technology sector fell 3.5%, while financials and consumer discretionary ended about 2% lower. The top performers on the benchmark index were two defensive groups, utilities and telecommunications, up 1.5% and 0.5% respectively.

The Nasdaq Composite Index COMP, -2.93% meanwhile, fell 211.74 points, or 2.9%, to 7,008.81.

With two more sessions to go, the stock market is on track to post hefty monthly losses. The Dow is down 4.7% in March, and it is off 3.5% so far this year. The S&P is down 3.7% so far this month, while the Nasdaq is down 3.6% in March.

Read: The Dow and S&P 500 have already doubled the number of 1% moves seen in all of 2017

What’s driving markets?

Fears about a possible trade war have weighed on markets around the world in March, as President Donald Trump threatens tariffs on at least $50 billion of Chinese goods. But such concerns appeared to abate Monday, thanks to reports that Washington and Beijing are negotiating.

Treasury Secretary Steven Mnuchin said Sunday that he’s “cautiously hopeful” that the world’s two biggest economies will reach an agreement to avoid tariffs, and Chinese Premier Li Keqiang said he believes the two countries “both have the intelligence to resolve the issue,” according to an official statement issued late Monday.

What are strategists saying?

“We are seeing a rotation out of high-flying tech stocks, which was overdue, but it’s not clear where the money is shifting to,” said James Meyer, chief investment officer at Tower Bridge Advisors.

Meyer noted that volatility is heightened because of changes in policies.

“Markets don’t handle transitions very well and we are dealing with about four simultaneously. Markets are adjusting to new Fed Chairman Powell at a time when policy is tightening. On the fiscal side we went from no fiscal policy to one very expansionary fiscal stimulus. The country is moving away from global approach to an isolationist and protectionist trade policy. There will be more volatility,” Meyer said.

“There were a lot of concerns about trade last week, which have since been put to rest. If China and the U.S. do negotiate their way out of this, that will take a bit weight out of the market. At the same time, we had gotten very oversold and the pessimism was very overdone, so we were poised to rally even before the good news,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Co.

Which economic reports are in focus?

The S&P/Case-Shiller national index rose a seasonally adjusted 0.5% in the three-month period ending in January, and was up 6.2% compared with a year before. Separately, consumer confidence unexpectedly fell in March, though it remains near an 18-year high.

Check out: MarketWatch’s Economic Calendar

See: Is the pressure off? Inflation likely to die down in February, but don’t get used to it

Which stocks are in focus?

The technology sector fell sharply, retreating after a massive jump in the previous session. Chip makers were particularly weak, with Nvidia Corp. NVDA, -7.76% down 7.7% and Advanced Micro Devices AMD, -4.21% off 4.2%. The iShares PHLX Semiconductor ETF SOXX, -3.68% fell 3.7%.

Twitter TWTR, -12.03% shares slumped 12%, while Netflix NFLX, -6.14% dropped 6.1%.

Facebook Inc.’s stock FB, -4.90% continued to slide amid news that CEO Mark Zuckerberg is planning to testify before Congress. Shares in the social-media giant fell 4.9% and are down 16% this month, driven by a firestorm over how the company handled people’s data.

Shares in McCormick & Co. Inc. MKC, +0.36% rose 0.3% after the producer of spices and sauces posted quarterly earnings that beat forecasts before the open. Revenue matched expectations, and the company plans to use some tax savings to pay out bonuses and raise wages.

Red Hat Inc.’s stock RHT, +0.87% gained 0.9% and hit a record high after the software company posted better-than-expected quarterly results late Monday.

General Electric Co. GE, +4.27% rose 4.3%, it’s biggest one-day jump in about two months. However, this comes after a pronounced period of weakness, which took the Dow component to its lowest level since 2009 on Monday. Thus far this year, it is down more than 23%.

What are other markets doing?

European stocks SXXP, +1.21% closed higher, after Asian markets finished with gains.

Gold futures GCJ8, -0.77% ended lower for the first time in five sessions. Oil futures CLK8, -1.36% settled lower. The ICE U.S. Dollar Index DXY, +0.30% advanced to trade 0.4% higher at 89.351.

Victor Reklaitis contributed to this article