The Dow Jones Industrial Average fell 201.92 points, or 0.77 per cent, to 25,989.3, the S&P 500 lost 25.82 points, or 0.92 per cent, to 2,781.01 and the Nasdaq Composite dropped 123.98 points, or 1.65 per cent, to 7,406.90.
The S&P energy index dropped 0.4 per cent after falling 2.2 per cent in the previous day’s session when US crude prices confirmed a bear market by falling 20 per cent from their most recent high.
“I think we’re going to go lower than the October low. Economic growth is slowing but it won’t slow enough to stop the Fed from hiking,” said Jim Paulsen, chief investment strategist at the Leuthold Group in Minneapolis.
Investors appeared unwilling to take on risk, sending the S&P technology index down 1.7 per cent as Apple Inc dropped 1.9 per cent and semiconductor stocks tumbled 1.9 per cent.
Eight of the 11 major S&P sectors ended the day lower.
The consumer staples index was the biggest gainer with a 0.5 per cent rise while other defensive sectors such as utilities and real estate eked out small gains.
Against the backdrop of the trade policy dispute between the Washington and Beijing, Chinese data showed producer inflation fell for the fourth straight month in October on cooling domestic demand and manufacturing activity, while car sales fell for a fourth consecutive month.
The Chinese data sent global stocks into a tailspin and put pressure on trade and commodity sensitive sectors. The US industrials sector fell 1.0 percent and materials dropped more than 1.4 percent.
US Federal Reserve policymakers left interest rates unchanged on Thursday, as expected and its policy statement signaled more rate rises ahead even as it noted that business investment had moderated.
The latest data on US producer price inflation did little to