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US (US) stocks tumbled on Monday after China announced retaliatory tariffs on US goods, heightening fears of a full-blown trade war between the world's two largest economies that could cripple global economic growth.
At the heart of the selloff were shares in major technology companies including Apple Inc as well as chipmakers, manufacturers and retailers that draw a large share of their revenue from China.
Apple's shares fell 5.9 per cent, putting the S&P 500 and the Nasdaq on track for their biggest one-day percentage drop this year.
The sell-off that began with stocks surfing at an all-time high on May 1 has now knocked almost five per cent off the S&P 500 in less than two weeks.
That still compares favorably with a 20 per cent fall between October 3 and Christmas of last year, but it has traders again talking about the end of a decade-long rally that dates back to the aftermath of the 2008 financial crash.
The front part of the US Treasury yield curve, running from three-month bills through to 10-year notes, inverted for the second time in less than a week. A sustained inversion of this part of the yield curve has preceded every recession in the past 50 years.
“A lot of the run up this year was not only because the Fed changed its course, but also due to the abating of trade war concerns, and now that they've invigorated, it causes the gain to come off,” said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co.
China's finance ministry said on Monday it planned to impose tariffs ranging from five per cent to 25 per cent on 5,140 US products on a target list worth about $60 billion from June 1, striking back after the US raised duties last week.
Bank of America Merrill analysts said the new tariffs posed a downside risk of between one per cent and 3 per cent for S&P 500 company earnings in 2019.
Tariff-sensitive Boeing Co declined 4.8 per cent and Caterpillar Inc fell 5.4 per cent, while the Philadelphia Chip index was down 4.9 per cent, adding to a 6 per cent decline last week.
At 13:03 ET the Dow Jones Industrial Average was down 703.24 points, or 2.71 per cent, at 25,239.13, the S&P 500 was down 78.43 points, or 2.72 per cent, at 2,802.97 and the Nasdaq Composite was down 277.33 points, or 3.50 per cent, at 7,639.61.
Ten of the 11 major S&P sectors were lower, with technology , industrial and material stocks posting losses of more than three per cent.
Shares of Uber Technologies Inc dropped 11.3 per cent, more than doubling their losses since the ride-hailing giant's poorly received Wall Street debut on Friday.
Apple shares were also hit by news that the US Supreme Court gave the go-ahead for a lawsuit by consumers accusing the iPhone maker of monopolizing the market for its software applications and forcing them to overpay.
Banks, which suffer from the fall in long-term rates below short-term funding costs, fell 3.4 per cent.
Declining issues outnumbered advancers for a 6.05-to-1 ratio on the NYSE and a 6.52-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and 20 new lows, while the Nasdaq recorded 20 new highs and 136 new lows.
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