Wall Street stocks plunged more than 700 points Thursday after President Donald Trump hit China with tariffs on up to $60 billion of goods, reviving fears of a trade war.
The Dow Jones Industrial Average fell 2.9 percent to close at 23,957.89, near the lowest point of a rocky session.
The broad-based S&P 500 dropped 2.5 percent to end the day at 2,643.69, while the tech-rich Nasdaq Composite Index fell 2.4 percent to finish at 7,166.68.
Saying it would be the "first of many" trade actions, Trump signed a presidential order to retaliate for China's "theft" of American intellectual property.
Beijing has vowed to defend its interests, setting the stage for dreaded tit-for-tat conflict that analysts fear could harm both countries as well as the global economy just as it is recovering.
"The stakes have been raised, especially now that it appears that President Trump is singling out China," said Jack Ablin, chief investment officer at Cresset Wealth Advisors.
"Considering China is one of the largest purchasers of US Treasuries, that has sent shivers across the stock and bond markets."
Analysts also cited other factors behind Thursday's big drop, including unease over Federal Reserve's plans to raise interest rates under new chairman Jerome Powell, and worries that a data scandal involving Facebook could spur heavy-handed regulation of the fast-growing technology sector.
Investors also took note of news of the departure of John Dowd, a top lawyer on Trump's team in the Russia investigation led by special counsel Robert Mueller.
The Mueller investigation "went from being noise to being a market driver when Mueller subpoenaed the Trump organization documents," said Art Hogan, chief market strategist at Wunderlich Securities, who described the subpoena as a "red line" for the market.
"Now we've crossed a red line… and mix into that narrative the fact that you have the legal team for Trump moving around a little bit," Hogan said. "There's concern."
Multinationals that rely heavily on China were among the bigger losers. Boeing and Caterpillar fell more than five percent and General Motors lost 3.3 percent.
Banking shares fell on a pullback in yields on the 10-year US Treasury bonds. The move implies interest rates will not rise as fast as expected, crimping bank profits.
JPMorgan Chase, Bank of America and Citigroup all lost more than four percent.
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Updated Date: Mar 23, 2018 07:22:45 IST