In comments on Tuesday, New York Fed President John Williams said the USA central bank should expect to continue raising interest rates "over the next year or so" even while it pays close attention to possible risks highlighted by financial markets.
The wave of selling erased the market's gains from a day earlier, when stocks rallied on news that the USA and China had agreed to a temporary truce in their trade dispute.
The Dow Jones Industrial Average lost 3.1 per cent to 25,027 the S&P 500 dropped 3.2 per cent to 2,700 and the NASDAQ plunged 3.8 per cent to 7158.
The S&P 500 index slid 90.31 points, or 3.2 percent, to 2,700.06. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
The US stock and bond markets will be closed on Wednesday to mourn the death of former US President George H.W. Bush.
Markets in Europe also fell. China has said nothing about the commitment to remove auto tariffs flagged by the US, nor did its statement mention the 90-day timeline for talks the Americans have specified.
Meghan Markle just achieved something no other royal family member has
Members of the royal family gathered at Buckingham Palace on Tuesday evening for a reception for members of the Diplomatic Corps . The fund supports schools in rural Uganda, and Harry and Prince William have been patrons of the organization since 2007.
U.S. stocks were sharply weaker after investors became sceptical about the significance of the weekend's agreement reached by the USA president Donald Trump and China's Xi Jinping to postpone new tariffs. The Organization for Economic Cooperation and Development forecast that global growth would slow from 3.7 percent this year to 3.5 percent in 2019 and 2020. The S&P ASX/200 in Australia gave up 1 percent.
The trade dispute has rattled markets in recent months as signs emerged that it has begun affecting corporate profits.
Trade-sensitive shares were undermined by a failure by Donald Trump's aides to detail the deal that he said he had struck with China, eroding confidence in the agreement, which still doesn't exist on paper and hasn't been confirmed by Beijing. Apple (NASDAQ: AAPL) fell by 4.4%, Netflix (NASDAQ: NFLX) fell by 5.1%, Alphabet (NASDAQ: GOOG) fell by 4.8%, while Facebook saw the smallest loss of 2.2%. The slide in bond yields, which affect interest rates on mortgages and other consumer loans, weighed on bank stocks. Advanced Micro Devices dropped 10.9 percent to $21.12, while Micron Technology lost 7.9 percent to $36.88.
United Parcel Service slumped 7.4 percent to $106.77 and FedEx dropped 6.3 percent to $215.52. The contract rose 30 cents on Tuesday to close at $53.25. Brent crude, the global standard, added 0.9 per cent to $62.22 per barrel in London.
The dollar weakened to 112.82 yen from 113.69 yen late Monday. The euro strengthened to $1.1349 from $1.1342. The British pound fell to $1.2716 from $1.2728. Hong Kong's Hang Seng added 0.3 percent.
European markets fell on Tuesday, with Germany's DAX losing 1.1 percent and France's CAC 40 dropping 0.8 percent.