The S&P 500 and the Dow Jones Industrial Average slipped back into losses for the year on Thursday as U.S. stocks slid on mounting worries of slowing global growth after a fresh twist in China-U.S. tensions as well as falling oil prices and U.S. bond yields.
The Dow sank more than 3 per cent, or over 750 points, while the S&P and the Nasdaq shed roughly 2.5 per cent, adding to a more than 3 per cent tumble for the three indexes on Tuesday.
Canada arrested Chinese smartphone maker Huawei Technologies Co Ltd's chief financial officer for extradition to the United States, casting fresh doubts over the prospect of Beijing and Washington striking a deal on trade tariffs in their 90-day truce period.
"Disappointment in the China agreement and the arrest of Huawei CFO is on everybody's mind today and it puts a damper in the trade talks," said Larry Benedict, founder of Opportunistic Trader in Boca Raton, Florida.
Optimism after the trade truce over the weekend boosted Wall Street on Monday, extending a rally from last week when the Federal Reserve signalled the pace of rate increases could slow.
The drop continued Thursday – the U.S. market was closed on Wednesday – as bond yields and oil prices both slid.
Benchmark 10-year Treasury yield held at three-month lows as traders scaled back bets on the number of rate hikes after data showed the U.S. trade deficit hit a 10-year high in October and that the pace of job growth was moderating.
Crude oil prices fell after an OPEC meeting in Vienna over production policy ended without a decision. Earlier the OPEC signalled it may agree to a smaller cut than expected.
All the 11 major S&P sectors were in the red. Technology fell 2.28, energy retreated 3.43 percent, while the trade-sensitive industrials fell 2.85 per cent.
"If markets keep going down then the Fed is not going to (raises rates)," Benedict said.
At 11:27 a.m. ET, the Dow was down 776.45 points, or 3.10 percent, at 24,250.62, the S&P 500 was down 77.81 points, or 2.88 percent, at 2,622.25 and the Nasdaq Composite was down 172.30 points, or 2.41 percent, at 6,986.12.
The CBOE Volatility Index, the most widely followed barometer of expected near-term volatility for the S&P, jumped to its highest since Oct. 30.
Declining issues outnumbered advancers for a 5.70-to-1 ratio on the NYSE and a 3.34-to-1 ratio on the Nasdaq.
The S&P recorded two new 52-week highs and 68 new lows. The Nasdaq showed seven new highs and 311 new lows.
(With inputs from agencies.)