NEW YORK, Aug. 5 (Xinhua) -- U.S. stocks plunged in the afternoon session on Monday with the Dow dropping more than 900 points, as investors worry that U.S. President Donald Trump's threatened new tariffs on Chinese imports will worsen trade prospects.
The S&P 500 erased 3.47 percent while the Nasdaq declined 3.97 percent.
Trump tweeted Thursday that he would place an additional 10 percent tariff on the remaining 300 billion U.S. dollars worth of Chinese imports starting on Sept. 1.
Several U.S. industry associations have voiced their opposition to the White House's plan to impose more tariffs, arguing that such action will not facilitate negotiation but only hurt Americans.
Analysts have said that since the new tariff would target retail items, along with other consumer goods, the impact on the U.S. economy will be more direct.
China's National Development and Reform Commission and the Ministry of Commerce said on Monday it would temporarily not rule out the possibility of levying additional tariffs on imported U.S. farm produce with deals made after Aug. 3, and related Chinese companies have halted purchases of U.S. farm produce.
All 11 primary S&P 500 sectors dropped, with technology and communication services sectors leading the decliners. All Dow components companies traded at red territory with Apple erasing more than 5 percent.
The Cboe Volatility Index, widely considered to be the best fear gauge in the market, jumped more than 38 percent to 24.29.
"The fall in U.S. equities in particular is an interesting development, because it highlights how they are no longer benefitting from a view that trade wars are 'easy to win'," Capital Economics said in a note on Monday.
The economic research company forecast that the S&P 500 will fall by another 15 percent or so between now and the end of this year, as investors' lofty expectations for earnings are dashed by continued sluggish growth in the United States and elsewhere, which won't be helped by escalating trade tensions. At the same time, the Federal Reserve will not loosen policy by as much as investors have hoped.
Investors rushed to traditional safe haven assets like Treasuries and gold on Monday amid the uncertainty. The most active gold contract for December went up 1.3 percent on Monday afternoon.