The Dow Jones Industrial Average dropped 178 points while the S&P 500 slid 0.7%. The Nasdaq Composite declined by 0.8%.
The 10-year Treasury note yield fell to its lowest level since September 2017 and traded around 2.22%. A portion of the so-called yield curve further inverted as 3-month Treasury bills last yielded 2.351%, well above the 10-year rate. A yield curve inversion is seen by traders as a potential sign that a recession is in the horizon.
Bank shares fell along with yields. Citigroup, Bank of America and J.P. Morgan Chase all dropped more than 1%.
The S&P 500 broke below 2,800, a key technical level watched by traders. The broad index also traded around its lowest level since late March.
“The topping pattern is crystal clear,” Frank Cappelleri, executive director at Instinet, wrote in a note. He added that other stock indexes across the globe were also showing topping patterns. “The equity advance through April was broad, which helped keep the uptrend intact. Now, with so many areas sporting bearish patterns like this, if one breaks, the odds are it will have company.”
Traders were also keeping an eye on the Justice Department after announcing special counsel Robert Mueller will make a statement on the Russian probe.
Washington and Beijing have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment.
In the latest move, China made a veiled threat this week through state media regarding rare earth minerals, a market crucial to the U.S. technology and defense industries which China dominates.
Chipmakers, which have gotten pounded this month on fears of disrupted supply chains and lost customers due to the trade war, fell again Wednesday. Micron Technology pulled back 1% while Nvidia declined by 1.5%. Trade bellwethers Boeing and Caterpillar were also lower.
The major stock indexes were headed for their first monthly decline of 2019. The Dow and S&P 500 were both down more than 4% entering Wednesday’s session.
The Opportunistic Trader’s Benedict pointed out that the market’s decline has been steady and without many large moves.
“This move is worse because everybody is waiting for a bounce and it hasn’t come,” he said. “If we went down 3% and then bounced up 1%, that’s a better scenario than drifting lower … It’s like a slow death.”