Technology companies drove a broad slide in U.S. stocks Tuesday as disappointing economic data and the latest escalation in the trade war between the U.S. and China put investors in a selling mood.
The Dow Jones Industrial Average slumped more than 280 points as the market gave back some of its gains from last week. The losses ended a three-day winning streak for the S&P 500.
The sell-off got going as markets opened after a long weekend to expanded tariffs between Washington and Beijing, and little sign that talks would restart soon. New economic data showing that U.S. factory activity shrank in August for the first time in three years helped drive the selling.
Investors fled to safer holdings, including utility stocks, bonds and gold. Oil prices fell.
The S&P 500 dropped 20.19 points, or 0.7%, to 2,906.27. The Dow lost 285.26 points, or 1.1%, to 26,118.02. The average was briefly down 425 points.
The Nasdaq fell 88.72 points, or 1.1%, to 7,874.16. Smaller company stocks also fell sharply, sending the Russell 2000 index down 22.56 points, or 1.5%, to 1,472.28.
The worsening trade situation between the world's two largest economies dragged the benchmark S&P 500 to its second monthly loss of the year in August and dented investors' confidence in global economic growth.
On Sunday, the U.S. started charging a 15% tariff on about $112 billion of Chinese products. China responded by charging tariffs of 10% and 5% on a list of American goods.
The latest escalation in the lingering trade conflict had been expected since early August when the U.S. announced plans for the new tariff measures, prompting China to retaliate.
Still, stocks fell as investors turned pessimistic that any resolution will be forthcoming in the near future, even as negotiators from the U.S. and China are supposed to meet in September to continue trade talks.
"Today it appears that the two sides aren't even able to agree on a date, and that's making investors feel more skeptical that even if there's a meeting there won't be any progress," Warne said.