U.S. stock indexes fell more than one per cent on Thursday, as investors sold off technology, industrials and energy stocks on fears that a spiraling trade war between the United States and China would crimp global growth.
Technology, among sectors most exposed to China, was the hardest hit. Microsoft Corp and Apple Inc were down more than one per cent, dragging the sector lower, while the chip index dropped 2.3 per cent.
Oil prices plunged more than five per cent on trade fears, leaving the energy index down 3.2 per cent, the biggest decliner among the major 11 S&P sectors.
Materials, financial and consumer discretionary sectors also posted losses of more than one per cent in a broad-based decline.
“This is a textbook defensive move,” said Shawn Cruz, manager of trader strategy at TD Ameritrade in New Jersey.
“The one thing that can give markets some reprieve is that if the U.S. and China come back to the negotiating table and delay the tariffs they have already put in place.”
In Toronto, the benchmark S&P/TSX composite index was down 0.9 per cent to 16,182.07 points.
Beijing said on Thursday Washington needs to correct its “wrong actions” for trade talks to continue after the United States blacklisted Huawei Technology Co Ltd last week.
In further evidence of the trade war hitting domestic economy, data from IHS Markit showed U.S. manufacturing growth measured its weakest pace of activity in nearly a decade and new orders fell for the first time since August 2009.
The newest round of U.S. tariffs on Chinese imports will cost the typical American household $831 US annually, according to a Federal Reserve Bank of New York research.
Stocks have succumbed to selling pressure in May after Washington and Beijing engaged in tit-for-tat tariffs and other retaliatory measures, with the S&P 500 on track to post its worst monthly decline since the December sell-off.
The Dow Jones Industrial Average was down 1.7 per cent at 25,351.12. The S&P 500 was down 1.5 per cent at 2,813.07, and the Nasdaq composite was down more than two per cent at 7,593.09 points.
U.S. Treasury yields dropped, and two yield curve indicators briefly inverted on Thursday, sending the banking index down two per cent.
Defensive utilities was up 0.2 per cent, while real estate was flat.
Among other stocks, NetApp Inc slumped 11.9 per cent, the most on the S&P 500, after the data storage equipment maker forecast current-quarter profit and revenue below Wall Street estimates.
In a bright spot, L Brands Inc jumped 12.5 per cent after the retailer reported better-than-expected quarterly earnings.