(CNN) -- Tokyo's Nikkei tumbled more than 4 percent by the midday break Tuesday amid a string of negative economic news showing massive job cuts and sagging industrial production.
Australia's All Ordinaries index slipped 1 percent, while South Korea's KOSPI gained 0.6 percent. In Hong Kong, the Hang Seng was up a quarter point.
Stocks tumbled on Wall Street Monday, dragged down by concerns about Citigroup's potential deal with Morgan Stanley -- and the start of the fourth-quarter earnings reporting period.
The Dow Jones industrial average lost 1.5 percent, or 125 points, to close at 8474. The Standard & Poor's 500 index shed 2.3 percent and the Nasdaq composite slid 2.1 percent.
Alcoa started off the fourth-quarter reporting period on a less-than-encouraging note. The aluminum maker reported an adjusted loss of 28 cents per share, versus a profit of 36 cents per share a year ago. Analysts surveyed by Briefing.com thought the aluminum giant would lose 10 cents. The company also reported a bigger-than-expected rise in revenue.
A week ago, Alcoa warned it would layoff 13 percent of its workforce to save costs.
Fourth-quarter earnings are anticipated to be pretty dismal across the board, with companies struggling amid the recession.
On Friday stocks slumped after a government report showed employers cut 524,000 jobs from their payrolls in December, bringing 2008's total job losses to almost 2.6 million. Ahead of that, stocks, as measured by the S&P 500, had risen roughly 20 percent from the bear market lows of late November.
The rally was probably a little too much, a little too quickly, and now investors are experiencing a little buyer's remorse, said Greg Church, founder and president at Church Capital.
"Earnings are going to be a disaster and I think the Citigroup story is having an impact too, since it brings the focus back to the financials," he said.
Citigroup is reportedly in talks with Morgan Stanley to sell a majority stake in its Smith Barney brokerage unit as a means of raising cash. Citigroup shares fell 17 percent Monday, while Morgan shares fell 1 percent.
Financial shares slipped, including Bank of America, which lost 12 percent.
In global trading, European markets tumbled Monday. Paris and Frankfurt each lost more than a percent, while London shed half a percent.
U.S. light crude oil for February delivery fell $3.24 to settle at $37.59 a barrel on the New York Mercantile Exchange.