By Shreyashi Sanyal
Beijing announced a steep cut in the level of cash that banks must hold as reserves, aimed at lowering financing costs and spurring growth amid the trade spat. Still, China stocks slid and weighed on global markets as well.
"There are concerns about the Chinese economy and the impact of trade," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
"As we head into earnings season, investors will be looking at the rest of the world to gauge the real impact of tariffs."
On Wall Street, fears of slowing growth manifested in a drop in high-flying stocks that have led the market rally, with concerns about valuations in the pricier names coming to the fore, especially with the corporate earnings season on tap.
The biggest casualties were technology stocks, which tumbled 2.18 percent. Apple fell 1.4 percent, Microsoft slid 2.3 percent and Nvidia was down 3.3 percent.
The communication services sector dropped 1.23 percent, with heavyweight Netflix down 3.5 percent. Facebook dropped 1.2 percent and Alphabet fell 2.4 percent.
Alphabet's Google exposed the data of hundreds of thousands of users of its Google+ social network and opted not to disclose the information, due to fears of regulatory scrutiny, the Wall Street Journal reported.
Trade-sensitive industrials shed 0.59 percent, with Boeing down 1.4 percent.
The U.S. Treasury said it was concerned about China's currency depreciation and that it was monitoring developments related to the yuan, according to CNBC.
While the U.S. bond market was closed for the Columbus Day holiday, yields on the 10-year note at seven-year highs kept investors on edge.
"There is anxiety about how the bond market will reopen and when you get a little bit of a downturn, the sentiment just builds over it," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
At 1:00 p.m. ET the Dow Jones Industrial Average was down 168.65 points, or 0.64 percent, at 26,278.40, the S&P 500 was down 15.37 points, or 0.53 percent, at 2,870.20 and the Nasdaq Composite was down 129.20 points, or 1.66 percent, at 7,659.25.
The three defensive sectors were the only gainers among the 11 major S&P sectors. Utilities and consumer staples gained 1.21 percent, while real estate companies rose 1.58 percent.
Among the few bright spots was General Electric, which climbed for the sixth day in a row. The latest 2.4 percent gain was after Barclays echoed investor optimism about new Chief Executive Officer Larry Culp and the conglomerate's plans to sell a portfolio of $1 billion in energy investments.
Declining issues outnumbered advancers for a 1.54-to-1 ratio on the NYSE and for a 2.01-to-1 ratio on the Nasdaq.
The S&P index recorded seven new 52-week highs and 23 new lows, while the Nasdaq recorded 12 new highs and 120 new lows.
(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)