(CNN) — US stocks dropped on Tuesday afternoon after fourth-quarter earnings and forecasts from mega-retailers like Walmart and Home Depot raised concerns about the strength of the US consumer.

The Dow was down about 650 points, or 1.9%, on Tuesday afternoon. The S&P 500 dropped fell 1.8%, briefly dropping below the 4,000 threshold for the first time since January 25. The Nasdaq Composite was 2.2% lower.

Consumer spending accounts for about 70% of America’s gross domestic product, the broadest measure of the US economy, so a slowdown could weigh on growth and even send the United States into a recession.

Recent economic data has been strong. But sticky inflation and now warnings from bellwether retail companies like Walmart and Home Depot have traders worried that the already hawkish Fed will hold rates higher for longer.

Walmart topped revenue expectations, but shares of the stock fell nearly 2% in morning trading after the retailer lowered its outlook for the year ahead. Walmart’s CFO said that he was worried about inflation and its impact on the US consumer.

“The consumer is still very pressured, and if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods,” Walmart CFO John Rainey said during the earnings call. “And so that’s why we take a pretty cautious outlook on the rest of the year.”

Shares of the stock had recovered by the early afternoon and were up by about 0.5%.

Home Depot reported record earnings for the fiscal year that ended in January, and boosted both hourly wage and the stock dividend. But the fourth quarter painted a different picture, as the company missed revenue expectations for the first time since 2019, before the pandemic.

The company also lowered its outlook for the year ahead as executives struck a more cautious tone about recession and inflation forecasts on the call that followed earnings.

Shares of the stock fell by 6.3% on Tuesday afternoon.

“After a year of defying gravity, the slowing economy and pressures on consumers have finally caught up with Home Depot,” said Neil Saunders, managing director of GlobalData. “For most of 2022, the number of existing homes sold has been in decline. However, the pace of decline accelerated in December with the volume of completed sales down by a sharp 36.3%.”

Still, the home improvement chain said it isn’t taking a hit from the weakness in the home sale market that is resulting from higher mortgage rates. In fact CFO Richard McPhail said the company could be benefiting from the current state of the housing market, as homeowners have more incentive to fix up their current homes rather than move.

“Over 90% of US homeowners either own their homes outright or have fixed rate mortgages under 5%,” McPhail said. “And so that incentive to sell and move to a higher rate mortgage just isn’t there. And in fact, the incentive is really there to improve in place.”

Target, Best Buy, Macy’s and Gap will report later this month.

Investors, meanwhile, are gearing up for a week full of important economic data. Minutes from the Fed’s last meeting are coming on Wednesday, a second revision of GDP will be released on Thursday and Friday brings January’s Personal Consumption Expenditures — the Fed’s preferred inflation gauge.

Dow drops by more than 650 points as retail earnings disappoint