“It happens seemingly every August where we have events that move the market out of proportion to the events.”
Goldman Sachs said on Sunday that its economists see recessionary risks increasing as the trade war between the world’s two largest economies drags on, and no longer expect a resolution before the 2020 US presidential election.
The move away from risk sent gold prices higher and US Treasury yields lower.
“It’s a flight to safety given the global situation, from Hong Kong to Strait of Hormuz,” Hellwig added.
Data on inflation, housing starts and retail sales are due later in the week, and will be scrutinized by market participants for signs of economic softening.
“Consumer confidence has held up well so we’ll see where the rubber meets the road with retail sales,” said Hellwig.
In late trade, the Dow Jones Industrial Average has fallen 399 points, or 1.52 per cent, to 25,888.44, the S&P 500 has lost 36.39 points, or 1.25 per cent, to 2,882.26 and the Nasdaq Composite dropped 95.73 points, or 1.2 per cent, to 7,863.41.
All 11 major sectors of the S&P 500 were in the red, with financials, energy and materials suffering the largest percentage losses.
Second-quarter reporting season is approaching the finish line, with 452 of the companies in the S&P 500 having reported. Of those, 73.5 per cent have beaten consensus estimates.
Looking ahead to the third quarter, there have been 58 negative pre-announcements compared with 19 positive, resulting in a 3.1 negative-positive ratio, higher than 2.7 average since 1997.
Streaming platform Roku gained 6.2 per cent after a research note from Needham picked the stock over larger rival Netflix.
Shares of Amgen were up 4.5 per cent following a court ruling that upheld two patents relating to its drug Enbrel.
Coach owner Tapestry and Versace owner Capri dropped 4.1 per cent and 4.3 per cent, respectively, after Chinese social media took the companies to talks for selling T-shirts that showed Chinese-controlled territories of Hong Kong and Macau as countries.
Media companies CBS Corp and Viacom are in the final stages of negotiating an all-stock merger that values Viacom at a discount to its closing price on Friday, sending Viacom shares down 4.5 per cent.
Declining issues outnumbered advancing ones on the NYSE by a 2.36-to-1 ratio; on Nasdaq, a 1.98-to-1 ratio favored decliners.
The S&P 500 posted 23 new 52-week highs and 20 new lows; the Nasdaq Composite recorded 38 new highs and 138 new lows.