Banks and technology companies drove down a broad mix of stocks on Monday, at one point pushing the Dow Jones Industrial Average more than 400 points lower.
The Dow closed 1.5% lower, at 25,896. The S&P 500 stock index and the tech-heavy Nasdaq composite each lost 1.2%, with the S&P 500 closing at 2,882 and the Nasdaq closing at 7,863.
The sell-off adds to losses the market racked up last week amid heightened anxiety over the U.S. China-trade war that is stretching from the tradings desks of Wall Street to the soybean and corn fields of Iowa. An escalation in tensions this month between the world's largest economies has stoked worries that the fallout from the costly trade conflict will undercut an already slowing global economy. Traders have responded by selling stocks and buying government bonds.
"Trade and the concern that as this escalates it continues to wear on confidence to a point that this actually causes a recession, that's what people are wrestling with," said Ben Phillips, chief investment officer at EventShares.
Traders continued to shift money into bonds Monday, bidding up bond prices. Those higher prices pulled down the yield on the 10-year Treasury bond to 1.65% from 1.73% late Friday. The yield is used as a benchmark for interest rates on mortgages and other consumer loans.
The drop in bond yields weighed on financial sector stocks. Bank of America fell 2.5% and Citigroup gave up 2.9%. Credit card issuer Synchrony Financial slid 3.7% and Capital One Financial dropped 2.5%.
Technology, health care and consumer discretionary stocks accounted for much of the market's decline. Symantec dropped 6.2%, Nektar Therapeutics slumped 10.8% and Tractor Supply fell 4.6%.
Real estate and utilities stocks posted the smallest declines. Traders usually seek the shelter of dividend-friendly utilities and bonds when they want a more secure place to put their money because of concerns over economic growth.
Investors are facing a relatively slow week as far as economic reports and corporate earnings. The Labor Department will release its consumer price index for July on Tuesday and the Commerce Department will release last month's retail sales results on Thursday.
Macy's reports quarterly results on Wednesday and Walmart will report results on Thursday. They are among the last major companies to report their earnings for the latest quarter.
Anxiety and fear over the U.S.-China trade war continues to hover over the market and hasin August. The indexes are down more than 3% for the month, but still up solidly this year, led by the Nasdaq's 18.5% gain. The S&P 500 is up nearly 15% for the year, though it's down 4.8% from its all-time high set at the end of July.
The wild swings follow President Donald Trump's threat to impose more tariffs on Chinese goods, followed by China's move to allow its currency to weaken.
Trump has said he'd be "fine" if the U.S. and China don't go ahead with a meeting next month, dampening investors' hopes for a path to resolving the economically damaging trade war.