Bengaluru: US stocks slipped on Monday, dragged down by financial shares, as investors fled riskier assets on fears that a drawn-out trade war between the United States and China could force the global economy into recession.
The three main Wall Street indexes ended marginally lower last week, wrapping up five days of high volume trading marked by wild swings, as investors feared that a slide in China's yuan would expand the scope of the trade war to include currencies.
President Donald Trump said on Friday he was not ready to make a deal with China, pouring cold water on any hopes that the dispute would end soon. Trump's pledge to tax the remaining $300 billion worth of Chinese imports goes into effect on 1 September.
"It appears to me that the U.S. and China are pulling further apart on trying to reach an agreement," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin.
"If he (Trump) postpones that date (Sept. 1), we may get a short period of calm but as long as that issue of new tariffs is floating around out there, pending at some point, I think this volatility is going to remain."
Over the weekend, Goldman Sachs Group Inc said fears of the US-China trade war leading to a recession were growing and that it no longer expected a trade deal before the 2020 US presidential election.
Trade-related worries have been a major drag on the benchmark S&P 500, which has slipped 3.7% from its all-time high hit in July.
At 9:39 a.m. ET, the Dow Jones Industrial Average was down 188.66 points, or 0.72%, at 26,098.78, the S&P 500 was down 20.19 points, or 0.69%, at 2,898.46. The Nasdaq Composite was down 63.78 points, or 0.80%, at 7,895.36.
Investors seeking safety in perceived safe havens bolstered the Japanese yen, gold prices and U.S. government bond prices.
Ten of the 11 major S&P sectors were in the red, with the S&P 500 financial index shedding 1.47% and leading the losers. The bank sub-sector tumbled 2.01%, as lower bond yields hit shares of interest-rate sensitive lenders.
The so-called FAANG group - Facebook Inc, Amazon.com Inc, Apple, Netflix Inc and Google-parent Alphabet Inc - which have led the market rally this year, slipped between 0.5% and 1.5%.
Amgen Inc rose 4.0% as a U.S. judge upheld two patents relating to blockbuster rheumatoid arthritis drug Enbrel, denying a challenge by Novartis AG, which is seeking to launch a copycat version.
Declining issues outnumbered advancers for a 2.80-to-1 ratio on the NYSE and for a 2.69-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and nine new lows, while the Nasdaq recorded 13 new highs and 62 new lows.