U.S. stocks slid more than 1 percent on Tuesday in a broad-based selloff led by technology shares, as escalating trade tensions between the United States and China triggered global growth fears and kept investors away from riskier assets.
Beijing said on Tuesday that Chinese Vice Premier Liu He will visit the United States this week for trade talks, playing down U.S. President Donald Trump’s unexpected threat that he would raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent.
Trade tensions pushed U.S. treasury yields lower as investors turned to low-risk government bonds, pressuring interest rate sensitive banking stocks, which fell 1.51%.
Boeing Co, the single largest U.S. exporter to China, slipped 3.2% and Caterpillar Inc declined 2.0%.
“As we digest the significance of the tariff threat, we are a little less hopeful that we are going to see progress at the end of this week that will forestall the additional tariffs,” said Tony Roth, chief investment officer at Wilmington Trust in Wilmington, Delaware.
“The economy globally is coming off a soft landing. We saw some re-acceleration as we moved closer to a resolution, but here as it falls apart, the question becomes how much direct and indirect impact will the tariffs have on the global economy.”
All the major S&P sectors were trading in the red, with nine of them posting losses of more than 1%.
The CBOE Volatility Index, a gauge of investor anxiety, spiked to its highest level in over three months.
At 12:39 p.m. ET the Dow Jones Industrial Average was down 391.89 points, or 1.48%, at 26,046.59. The S&P 500 was down 39.89 points, or 1.36%, at 2,892.58 and the Nasdaq Composite was down 123.30 points, or 1.52%, at 7,999.99.
Marquee names including Microsoft Corp, Apple Inc, Amazon.com Inc and Facebook Inc fell more than 1.7% and weighed on markets.
With earnings season now at its homestretch, profit estimates for the first quarter are now up 1.2%, a sharp improvement from the 2.3% decline expected at the start of the earnings season.
Of the 414 S&P companies that have reported earnings so far, about 75% have surpassed analysts’ estimates, according to Refinitiv data.
American International Group Inc jumped 7.6% after the insurer reported a quarterly profit that blew past expectations.
Mylan NV tumbled 17%, the most among S&P companies, after the drugmaker reported lower-than-expected quarterly revenue and failed to provide greater clarity on a potential revamp of the company’s strategy.
Declining issues outnumbered advancers for a 3.55-to-1 ratio on the NYSE and for a 2.71-to-1 ratio on the Nasdaq.
The S&P index recorded four new 52-week highs and five new lows, while the Nasdaq recorded 41 new highs and 34 new lows.