US stocks notched their second consecutive drop on Thursday while Treasuries rallied as investors were rattled by fresh trade and global growth fears.
The S&P 500 ended the day 0.9 per cent lower at 2,706.05, its worst day in more than two weeks. Utilities and real estate were the only major sectors on the S&P 500 to finish the day in the black, up 1.3 per cent and 0.8 per cent respectively. Energy fell the most, down 2.1 per cent on the back of lower oil prices, while tech and materials were both down about 1.4 per cent.
The Dow Jones Industrial Average fell 0.9 per cent to 25,169.53, while the Nasdaq Composite ended 1.2 per cent lower at 7,288.35.
Renewed fears about the health of the global economy unnerved investors with a sell-off beginning in Europe and spreading to US markets after the European Commission cut its economic activity forecasts for the eurozone and the Bank of England shelved plans for multiple interest rate rises and downgraded its economic outlook.
Markets had already been spooked last year by concerns about the Chinese and US economies that in part contributed to the worst December showing for Wall Street since 1931 but had managed to rebound sharply last month.
Compounding investor anxiety on Thursday were fears that a trade deal would not be achieved by the US and China ahead of a March 1 deadline to reach an agreement and prevent a new escalation in tariffs.
White House economic adviser Larry Kudlow told Fox Business the US and China still had a “pretty sizeable distance to go here” referring to trade negotiations between the two. President Donald Trump also indicated he would not meet Chinese President Xi Jinping ahead of the deadline. Mr Trump had recently said talks between both countries were “going well” and noted a final deal would not be struck until the two leaders had met.
Despite a heavy day for corporate results most companies underwhelmed investors with Coach parent Tapestry leading the decline on the benchmark S&P 500.
Investors fled to safety prompting a rally in Treasuries, with the yield on the US 10-year sliding 3.8 basis points to 2.657 per cent, while that on the two-year declined 3.9 basis points to 2.486 per cent. Yields move inversely to price.
The dollar index, a gauge of the buck against a weighted basket of peers, rose 0.15 per cent to 96.54.