Stocks were sharply lower Tuesday morning as traders returned to work following the Labor Day weekend.
The Dow Jones Industrial opened lower by 260 points, or 1 percent, after traders were greeted with additional trade tensions between the U.S. and China.
New tariffs went into effect over the holiday weekend, and China said it will sue the U.S. using the World Trade Organization’s dispute settlement mechanism.
“The US taxation measures are seriously contrary to the consensus of the heads of state of the two countries in Osaka,” said China’s Commerce Ministry in a statement.
“China is strongly dissatisfied and resolutely opposed. In accordance with relevant WTO rules, China will firmly safeguard its legitimate rights and interests and resolutely defend the multilateral trading system and the international trade order.”
The major averages extend their losses after the Institute for Supply Management said its manufacturing index fell to 49.1 in August, making for its first contraction in three years.
|I:DJI||DOW JONES AVERAGES||26041.29||-361.99||-1.37%|
|I:COMP||NASDAQ COMPOSITE INDEX||7893.773651||-69.11||-0.87%|
Trade-sensitive names such as Caterpillar and Boeing were among the biggest laggards in the Dow.
Meanwhile, insurance stocks with exposure to Florida, like FedNat Holding Company and Universal Insurance Holdings were rallying after Hurricane Dorian was projected to veer away from the state.
|FNHC||FEDERATED NATIONAL HOLDING COMPANY||12.50||+0.27||+2.21%|
|UVE||UNIVERSAL INSURANCE HOLDINGS||25.67||+0.67||+2.68%|
Commodities were mixed with West Texas Intermediate crude oil under pressure while both gold and silver rallied.
Elsewhere, the British pound hit its lowest level since October 2016 after Prime Minister Boris Johnson threatened to call a snap election if lawmakers don’t back his plans for a no-deal Brexit.
Markets across Europe were in the red, with France’s CAC pacing the decline.
In Asia, China’s Shanghai Composite gained 0.2 percent, Hong Kong’s Hang Seng lost 0.4 percent and Japan’s Nikkei was little changed.
Ken Martin contributed to this report.