Another round of selling gripped Wall Street on Wednesday as nervous investors fled health care, technology and other high-risk stocks in favor of the safety of bonds.
The broad sell-off, which lost some momentum in the last hour of trading, keeps the market on track for its fourth consecutive weekly loss and its first monthly drop this year.
The latest market slide comes as investors worry that the trade war between the U.S. and China will derail global economic and corporate profit growth as it drags on with no sign of a resolution.
The S&P 500 index fell 19.37 points, or 0.7%, to 2,783.02. The index had been down 1.3% earlier.
The Dow Jones Industrial Average lost 221.36 points, or 0.9%, to 25,126.41. It had tumbled 409 points.
The Nasdaq composite slid 60.04 points, or 0.8%, to 7,547.31. The Russell 2000 index of small companies dropped 14.07 points, or 0.9%, to 1,489.95.
Major stock indexes in Europe also fell.
With two more trading days left in May, the S&P 500 is heading for a loss of 5.5%. That would be its first monthly loss since December. The market has been heading steadily lower this month as prospects for the economy have dimmed and as traders got more worried about the lingering trade feud between Washington and Beijing.
China’s recent threat to use its supply of rare earths as a weapon is a worrying escalation, he said. Rare earths are chemical elements that are crucial to many modern technologies.
On Wednesday, traders continued to hammer technology stocks, which stand to suffer heavily in a prolonged trade war. Chipmaker Advanced Micro Devices fell 3.2%.
Health care and communications companies also bore a big share of the losses. Johnson & Johnson slid 4.2% and Google parent Alphabet dropped 1.7%.
The yield on the benchmark 10-year Treasury note held steady at 2.26%, the lowest level in nearly two years. It fell as low as 2.18% during the day.
Lower bond yields are typically a sign that traders feel uneasy about long-term growth prospects and would rather put their money into safer holdings. The yield on the 10-year Treasury note is down 1 percentage point over the last six months, sending another strong signal that investors are concerned about weakening economic growth.
The 10-year Treasury note remained below the yield on the three-month Treasury bill. When that kind of “inversion” in bond yields occurs over an extended period of time, economists fear it may signal a recession within the coming year. It has happened multiple times so far this year.
The slide in bond yields, which make loans less profitable, continued to hurt banks and other financial stocks Wednesday. American Express fell 1%.
The wave of selling also snared many big retailers.
Abercrombie & Fitch plummeted 26.5% in heavy trading and Canada Goose, which makes luxury down coats, plunged 30.9% after both companies issued weak sales forecasts. Capri Holdings, which owns Versace and Michael Kors, slid 9.8% after its own forecast also disappointed investors.
Energy futures ended mostly lower. Benchmark U.S. crude fell 0.6% to settle at $58.81 a barrel. Brent crude, the international standard, closed 0.9% lower at $69.45 per barrel.