Banks and technology companies drove a broad slide in stocks on Wall Street Monday afternoon that knocked the Dow Jones Industrial Average more than 400 points lower.
The sell-off adds to losses that the market racked up last week amid heightened anxiety over the U.S. China-trade war. An escalation in tensions this month between the world's largest economies has stoked worries that the fallout from the costly trade conflict will undercut an already slowing global economy. Traders have responded by selling stocks and buying government bonds.
"Trade and the concern that as this escalates it continues to wear on confidence to a point that this actually causes a recession, that's what people are wrestling with," said Ben Phillips, chief investment officer at EventShares.
Traders continued to shift money into bonds Monday, sending bond prices higher. That pulled down the yield on the 10-year Treasury to 1.65% from 1.73% late Friday. The yield is used as a benchmark for interest rates on mortgages and other consumer loans.
The drop in bond yields weighed on financial sector stocks. Bank of America fell 2.5% and Citigroup gave up 2.9%. Credit card issuer Synchrony Financial slid 3.7% and Capital One Financial dropped 2.5%.
Technology, health care and consumer discretionary sector stocks accounted for much of the market's decline. Symantec dropped 6.2%, Nektar Therapeutics slumped 10.8% and Tractor Supply fell 4.6%.
Real estate and utilities stocks posted the smallest declines. Traders usually seek the shelter of utilities and bonds when they want a more secure place to put their money because of concerns over economic growth.
Investors are facing a relatively slow week as far as economic reports and corporate earnings. The Labor Department will release its consumer price index for July on Tuesday and Commerce Department will release last month's retail sales results on Thursday.
Macy's reports quarterly results on Wednesday and Walmart will report results on Thursday. They are among the last major companies to report their earnings for the latest quarter.
KEEPING SCORE: The S&P 500 index was down 1.3% as of 3:34 p.m. Eastern time. The Dow Jones Industrial Average fell 401 points, or 1.5%, to 25,885. The Nasdaq composite dropped 1.3%. The Russell 2000 index of smaller companies fell 1.3%.
The indexes are down more than 3% for August. Even with after stumbling this month, the major stock indexes are up solidly this year, led by the Nasdaq's 18.5% gain. The S&P 500 is up nearly 15%, though it's down 4.8% from its all-time high set at the end of July.
FEAR FACTOR: Anxiety and fear over the U.S.-China trade war continues to hover over the market and has taken stocks on a wild ride in August.
The S&P 500 index zoomed up and down last week, ending with its second straight weekly loss. The wild swings follow President Donald Trump's threat to impose more tariffs on Chinese goods, followed by China's move to allow its currency to weaken.
Trump has said he'd be "fine" if the U.S. and China don't go ahead with a meeting next month, dampening investors' hopes for a path to resolving the economically damaging trade war.
MERGER CHATTER: Shares in Viacom and CBS fell amid published reports suggesting the entertainment companies are close to a merger deal. Viacom slid 4.8% and CBS lost 1.9%.
FEEDING GROWTH: Sysco rose 3.3% after the food distributor beat Wall Street's fiscal fourth quarter profit forecasts. The company's revenue edged higher on growth from its U.S. operations.
OVERSEAS: Stocks in Europe closed broadly lower while indexes in Asia ended broadly higher. Hong Kong's Hang Seng lagged and shed 0.4% as that city continues to deal with increased tensions from pro-democracy protests. The Hong Kong airport shut down on Monday when thousands of demonstrators occupied its main terminal.
Stocks in Argentina plummeted following a primary victory for a populist ticket in the nation's presidential elections. The nation is in a deep economic crisis and the potential for a drastic change in leadership is rattling investors there.
Matías Carugati, chief economist for Management & Fit, said the victory of the populist Alberto Fernández team would put "sustained" pressure on the exchange rate and stocks due to the prospect that the nation could shift course to a more state-interventionist course for the economy.
AP Business Writer Damian J. Troise contributed.