Stocks slide on trade war and recession fears

Consumer-related stocks were also among the biggest losers. Amazon fell 1.1% and Nike lost nearly 4%.

Weak revenue forecasts sent several retailers into nosedives. Abercrombie & Fitch and Canada Goose fell sharply — more than 20% each — after sharing their latest sales numbers with stock analysts.

Energy companies fell broadly following a 2.2% drop in oil prices. Banks continued declining on lower bond yields, which make loans less profitable.

Why traders see utilities and bonds as lower-risk bets

Lower risk Utilities held up better than the rest of the market as investors continued shifting money into lower-risk assets. Rising bond prices pushed yields lower again. The yield on the benchmark 10-year Treasury note fell to 2.23%.

Rising bond prices, which pull yields lower, are typically a sign that traders feel jittery about long-term growth prospects and would rather put their money into safer holdings.

On Tuesday, the yield on the benchmark 10 year Treasury fell to its lowest level in nearly two years. It also fell 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.

Investors have been increasingly anxious since the beginning of May. That’s when the U.S. and China concluded their 11th round of trade talks with no agreement. The U.S. then more than doubled duties on $200 billion in Chinese imports. China responded by raising tariffs on goods.

The S&P 500 index fell 1.2% as of noon, while the Dow fell 1.3%, or 327 points, to 25,020. The tech-heavy Nasdaq composite fell about 1%.