US stock indexes slumped 2 percent on Thursday, as investors dumped technology, industrial and energy stocks on fears that a spiraling trade war between the United States and China would shackle global growth. Technology, among sectors most exposed to China, was the hardest hit. Microsoft Corp and Apple Inc were the biggest drags, while the chip index dropped 2.79%.
Oil prices plunged over 5% as trade fears dampened the demand outlook, leaving the energy index down 3.72%, the biggest decliner among the major 11 S&P sectors. Materials, financials and consumer discretionary sectors also posted losses of about 2% in a broad-based decline.
"Investors realize that coming to a deal is going to be more challenging and that is really harmful to the economic environment," said Luke Tilley, chief economist at Wilmington Trust in Wilmington, Delaware. "It's a classic risk-off movement where you've got the higher-bated sectors such as financials, industrials and technology selling off the most."
Only the defensive utilities sector was up 0.22%, while real estate was flat.
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 the US economy, data from IHS Markit showed manufacturing growth measured its weakest pace of activity in nearly a decade and new orders fell for the first time since August 2009.
At 13:01 p.m. ET, the Dow Jones Industrial Average was down 441.25 points, or 1.71%, at 25,335.36. The S&P 500 was down 49.14 points, or 1.72%, at 2,807.13 and the Nasdaq Composite was down 162.01 points, or 2.09%, at 7,588.83.
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