Banks and industrial companies helped pull stocks broadly lower on Wall Street Tuesday afternoon, placing the market on track to snap an eight-day winning streak.
The sell-off came as traders weighed growing trade tensions between the U.S. and the European Union, and a report forecasting dimmer global economic growth this year.
Wells Fargo slid 1.7 percent and Deere & Co. fell 3.8 percent. Chipmakers led a slide in technology stocks. Advanced Micro Devices dropped 4.4 percent.
Those losses offset gains in stocks of communications service providers, a broad category that includes entertainment, telecommunications and internet companies. Facebook rose 1.4 percent
In another sign that investors were moving money into safer holdings, bond prices rose, sending yields lower. The yield on the benchmark 10-year Treasury fell to 2.50 percent from 2.52 percent late Monday.
The slide in U.S. stocks followed a skid in European indexes after the U.S. threatened to impose $11.2 billion in tariffs on European products, including cheese, wine and helicopters. The move would escalate a global trade war at the same time the U.S. is trying to resolve a trade dispute with China.
Meanwhile, The International Monetary Fund issued a dour forecast for global economic growth. The IMF projects 3.3 percent global growth in 2019, matching the weakest year since 2009. The U.S. fares particularly poorly, with growth now expected at 2.3 percent, down from 2.9 percent in 2018.
Tuesday's wave of selling marks a reversal for the market, which has been moving decidedly upward in recent weeks. The market had a torrid start this year after the Federal Reserve eased fears about a recession by saying it may not raise interest rates at all in 2019.
Investors will get more clues about the Fed's intentions Wednesday, when the central bank releases minutes from its latest policy meeting. The European Central Bank will also meet Wednesday.
Traders are also turning their focus to the latest round of corporate earnings reports, which are set to kick off on Wednesday with Delta Air Lines. Several banks, including JPMorgan Chase, will release their first-quarter results on Friday. Analysts expect earnings for the S&P 500 to decline for the first time in almost three years.
"We're in the later stages of the economic cycle, so earnings are definitely needed to keep the momentum going," said Jennifer Green, global investment specialist at J.P. Morgan Private Bank. "We've seen a very nice run, so far year-to-date, so the next stage is listening to how the earnings come in and the outlook and the guidance that these companies give us."
KEEPING SCORE: The benchmark S&P 500 index was down 0.6 percent as of 3.42 p.m. The Dow Jones Industrial Average dropped 186 points, or 0.7 percent to 26,154. The Nasdaq composite fell 0.5 percent and the Russell 2000 index of small-cap stocks gave up 1.1 percent.
Major indexes in Europe also fell.
TRADE TROUBLES: European markets gave up early gains and turned broadly lower after the U.S. threatened to impose tariffs on European products.
The threat from President Donald Trump could make investors even more concerned about trade disputes hurting an already slowing global economy. The latest tariff threat would punish the European Union for subsidizing plane maker Airbus, which competes with U.S.-based Boeing.
The spat between the U.S. and China has already made a list of goods more expensive for consumers and is weighing on an already slowing Chinese economy. Negotiators met again last week and both sides have said they are making progress toward some kind of resolution.
SOAKED: Pentair led the sell-off in industrial stocks after the maker of pool and other aquatic products slashed its profit forecast for the year. Cold and wet weather weighed down sales in the first quarter for the company's pool equipment, which includes filters and pumps. It also sells equipment used for wells and water treatment facilities. The stock plunged 13.5 percent.
CLIPPED WINGS: American Airlines Group fell 1.7 percent after the airline cut a key revenue measure because of grounded flights following Boeing's 737 Max troubles.
Regulators grounded Boeing's 737 Max jets following two deadly international crashes. That included 24 planes in American Airlines' fleet.
The airline also cited the lingering impact from a government shutdown for the lower revenue estimate.
DEAL ME OUT: Wynn Resorts slid 3.6 percent after the casino operator pulled out of a potential buyout of Australia's Crown Resorts. The company cited the "premature disclosure of preliminary discussions" as the reason.
The move would have given Wynn a wider global reach.
Late Monday, Crown Resorts told its investors that Wynn was offering about $7.1 billion in cash-and-stock deal.