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US stocks slumped on Thursday as President Donald Trump's move to impose tariffs on up to $60 billion of Chinese imports drove fears about the impact on the global economy, fuelling the biggest percentage declines in Wall Street's three major indexes since they entered correction territory six weeks ago.
Trump signed a presidential memorandum that will target the Chinese imports only after a consultation period. China will have space to respond, reducing the risk of immediate retaliation from Beijing.
But after equities recovered somewhat from earlier lows, selling pressure resumed on Wall Street heading into the close as investors fretted over the potential scale of U.S tariffs and possible impact on global trade.
“There is too much negative sentiment right now,” said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston. “It's possible that it will be rough sledding for a while. I don’t see anything on the horizon that will reassure people that things are just great.”
Major industrials slumped. Plane maker Boeing Co lost 5.2 per cent, Caterpillar Inc dropped 5.7 and 3M Co lost 4.7. The three were among the biggest drags on the Dow Jones Industrial Average. The S&P industrials sector plunged 3.28 per cent.
The Dow Jones Industrial Average fell 724.42 points, or 2.93 per cent, to 23,957.89, the S&P 500 lost 68.24 points, or 2.52 per cent, to 2,643.69, and the Nasdaq Composite dropped 178.61 points, or 2.43 per cent, to 7,166.68.
The losses marked the biggest daily percentage drop for each of the major indexes since February 8, when the Dow and S&P confirmed a market correction from their January 26 highs.
Selling was broad, with only the defensive utilities 0.44 on the plus side, up 0.44 per cent, out of 11 major S&P sectors.
The CBOE Volatility Index, the most widely followed barometer of expected near-term volatility in the S&P 500, finished up 5.48 points at 23.34, its highest close since Feb. 13.23.34
US treasury prices gained as investors sought out safe havens. Benchmark 10-year notes last rose 23/32 in price to yield 2.8244 per cent, from 2.907 per cent late on Wednesday.
The drop in yields weighed on financial stocks, which were down 3.70 per cent, making them the worst performing of the major sectors.
Another decline in shares of Facebook Inc, down 2.7 per cent, continued to weigh on the broader market and the tech sector, the best performing S&P group for this year. The S&P technology index fell 2.69 per cent on fears of greater regulation in the wake of the Facebook data leak.
Facebook Chief Executive Mark Zuckerberg said he was open to additional government regulation and happy to testify before the U.S. Congress.
AbbVie Inc tumbled 12.8 per cent after the drugmaker said it would not seek accelerated approval for its experimental lung cancer treatment based on results from a mid-stage study.
Declining issues outnumbered advancing ones on the NYSE by a 4.51-to-1 ratio; on Nasdaq, a 4.09-to-1 ratio favored decliners.
The S&P 500 posted three new 52-week highs and 19 new lows; the Nasdaq Composite recorded 36 new highs and 59 new lows.
Volume on U.S. exchanges was 7.77 billion shares, compared to the 7.17 billion average for the full session over the last 20 trading days.
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