The beginning of a new month wasn't enough to inspire lasting gains for the stock market. After the market jumped briefly at the open, investors pulled back throughout the day, giving back gains from a substantial recovery in October, sending the Dow Jones Industrial Average (^DJI -1.06%), S&P 500 (^GSPC -0.74%), and Nasdaq Composite (^IXIC -0.58%) modestly lower on the day.

Index

Daily Percentage Change

Daily Point Change

Dow

(0.24%)

(80)

S&P 500

(0.41%)

(16)

Nasdaq

(0.89%)

(97)

Data source: Yahoo! Finance.

For a long time, the biggest companies in the stock market held up a lot better than smaller companies. Yet that dynamic has reversed itself lately, with many of the so-called FAANG stocks seeing substantial losses.

That trend continued on Tuesday, as both Amazon.com (AMZN -0.07%) and Alphabet (GOOGL -0.28%) (GOOG -0.35%) were down sharply, once again. Below, you'll find out more about what sent their shares lower and whether there's an end in sight to the damage.

Breaking the trillion-dollar mark the wrong way

Amazon had the bigger move on Tuesday, falling more than 5.5%. The decline was enough to send the e-commerce giant's market capitalization back below the $1 trillion mark.

After last-week's earnings report from the company, Amazon shares continue to be sensitive to macroeconomic impacts. Many of those watching the company attributed today's declines to signs that the labor market remains strong, because a healthy job market puts upward pressure on wages that, in turn, could make it harder for the Federal Reserve to bring inflation under control in the months ahead.

It's not as though Amazon isn't doing anything to try to restore confidence in its growth potential. In just the past couple of days, the company has announced plans to break into the sports-talk entertainment niche, going head-to-head with giants of the broadcast industry like ESPN and FS1. A new financing solution will make merchant cash advance services available, while the Amazon Music program will expand its available catalog for members of its Prime subscription service.

Yet an even bigger question is whether the company's Amazon Web Services cloud business will see a slowdown if the economy weakens. Investors have long assumed that the long-term trajectory for cloud computing was higher, but any evidence to the contrary could have a meaningful impact on investors' reasons for holding the stock.

Alphabet approaches two-year lows

Meanwhile, Alphabet shares were down more than 4%. The move lower brought the online-search giant's stock to levels last seen nearly two years ago, and investors are still finding it hard to assess just how much damage might be done to the company's core revenue-generating assets.

Alphabet's financial report last week confirmed concerns about the status of the advertising industry. With so much of the company's revenue coming from ads, both from its search engine and YouTube video service, declines in sales from key segments highlighted the uncertainty surrounding whether advertisers will be able to sustain spending levels as economic conditions evolve.

Investors are hopeful that other parts of the business will be able to pick up the slack over time. For instance, the Google Cloud segment had much stronger growth than the rest of the business. Yet cloud-related revenue still makes up only about a tenth of overall sales, so it'll be a while before it has the impact on Alphabet's overall numbers that AWS has for Amazon.

Focus on the long run

Short-term stock swings are impossible to predict, and you can never rule out further share-price gains. Eventually, though, the long-term potential in Amazon and Alphabet will make itself apparent in its stock. For those with long time horizons, the opportunity to add to positions in these two giants of their respective industries could lead to impressive returns once the current economic uncertainty resolves itself.