A two-day pullback became a three-day swoon Thursday as equity traders fretted about global retaliation after President Donald Trump said the USA will slap tariffs on steel and aluminum imports.
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Wednesday's plunge left the Dow down 6 percent from its January 2018 all-time high, while the S&P 500 is off about 5.5 percent.
Canada's main stock index fell to a more than two-week low on Thursday, weighed by declines for auto parts, railroad and steel companies as global investors anxious about the impact of more protectionist trade policies proposed by U.S. President Donald Trump.
"The members of the S&P 500 has become quite globalized, and one may argue that most of the things that have benefited this bull market have been globalization-related", Michael O'Rourke, JonesTrading chief market strategist, said by phone.
The index lost 3.9 percent in February.
To cap an ugly month for markets that saw the S&P 500 break a 15-month total return winning streak, each of the major indexes finished sharply in the red with the Dow logging the largest losses.
At 8:47 a.m. ET, Dow e-minis were down 50 points, S&P 500 e-minis lost 1.75 points and Nasdaq 100 e-minis sipped 2.25 points.
Powell told the Senate Finance Committee that he does not see inflation in workers' wages "at a point of acceleration".
The yield on the key 10 year bond fell to 2.86% on Wednesday and to around 2.802% on Thursday - a sign that investors are selling out of shares and commodities and heading for the safest haven of all - US Treasuries.
"Investors are still trying to digest where the Fed is going to be between now and year end, and Powell has given it a hawkish tilt", said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
Consumer spending, which accounts for more than two-thirds of US economic activity, gained 0.2 percent in January, while core PCE price index, the Federal Reserve's favored gauge on inflation, rose 0.2 percent compared with economists' expectation of a 0.3 percent rise.
S&P 500 measures the performance of 500 widely held common stocks of large-cap USA companies. Crude oil was again decidedly negative in the session.
The materials group, which includes precious and base metals miners and fertilizer companies, rose 0.2 percent. Benchmark U.S. crude fell 65 cents to settle at $60.99 per barrel.
Gold dropped $12.70 to $1,305.20 an ounce, silver lost 13 cents to $16.28 per ounce and copper lost 1 cent to $3.12 per pound.
France's CAC 40 fell 1.1 percent and Germany's DAX was down 2 percent.
The dollar fell to 105.54 Japanese yen from 106.24 yen late Thursday. It is buying about 78.5 United States cents, 56.2 British pence and 63.9 euro cents. General Motors (GM.N) was down 1 percent.