US stocks fell sharply on Wednesday, cancelling out the Dow Jones industrial average's gains for the year, as investors shunned equities after data showing a record US trade deficit cast doubt on the soundness of the economic recovery.
The technology-heavy Nasdaq Composite Index lurched deeper into negative territory for the year, falling for the fourth session in a row. The index is down 60 percent from its all-time closing high of 5,048.62 on this day four years ago.
Some of the blue-chip Dow average's biggest percentage losers included Alcoa Inc, Caterpillar Inc, DuPont Co and International Paper Co.
"The market is sensing this is not your father's typical business cycle. Job growth will still be muted and you can't have a self-sustaining robust economic recovery without job growth," said Jeffrey Saut, chief investment strategist at Raymond James Financial in St. Petersburg, Florida. "There's still overhang from last Friday's payrolls report."
Questions about the economy popped up last week after a weak employment report. Investor confidence in the economy was shaken again on Wednesday by data showing the US trade deficit widened to a record $43.1 billion in January, according to the Commerce Department.
The Dow Jones industrial average ended down 160.07 points, or 1.53 percent, at 10,296.89. The S&P 500 Index closed down 16.69 points, or 1.46 percent, at 1,123.89, while the Nasdaq Composite Index ended down 31.01 points, or 1.55 percent, at 1,964.15.
It was the largest daily percentage loss for both the Dow and the Standard & Poor's 500 since October 22, 2003.
The blue-chip Dow has now erased its 2004 gains, closing off 1.5 percent for the year. The Nasdaq is down 1.96 percent since the end of 2003. The S&P 500 is still clinging to a 1 percent gain.
Volume was heavy, with roughly 1.65 billion shares changing hands on the New York Stock Exchange, above the 1.4 billion daily average last year. On Nasdaq, 2.15 billion shares were traded, ahead of the 1.8 billion daily average last year.
The Dow drew a bit of support from consumer products giant Procter & Gamble Co, which traded at its highest level in more than four years after the company raised its earnings outlook and dividend. P&G shares closed up $3.04, or 2.97 percent, at $105.53.
Alcoa, the world's biggest aluminium producer, led the Dow lower, falling 4.07 percent or $1.45 to $34.20.
Among the Dow's other biggest percentage losers were Caterpillar, the heavy equipment maker, down 3.78 percent or $2.89 at $73.51; DuPont, the No 2 US chemicals company, down 3.3 percent or $1.43 at $41.95, and International Paper, the world's largest forest products company, down 3.27 percent or $1.39 at $41.06.
Intel Corp, the world's biggest computer chip maker, dropped 2.39 percent or 67 cents to $27.31 - weighing on both the Dow and the Nasdaq. Microsoft Corp, the dominant software company, declined 1.36 percent or 35 cents to $25.37, also pulling on both the Dow and the Nasdaq.