Wall Street was hammered on Wednesday as investors dumped high-growth names such as technology and FAANG stocks, with rising Treasury yields and trade-related worries sapping their risk appetite.

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The benchmark S&P 500 and the Dow Jones Industrial Average fell nearly 1.5 percent and at the day's low had retreated 3.7 percent and 3.6 percent, respectively, from their all-time highs. The Nasdaq's 2-percent drop pulled it 7.1 percent away from its high.

All three indexes hit records between August 30 and October 3, despite the escalating Sino-US trade dispute gnawing at confidence on corporate profit growth through most of the year.

But a recent IMF warning on global growth taking a hit from trade disputes has hit confidence in the stock market, as has US Treasury yields at more than 7-year highs, signaling a tightening of capital globally.

"It's a risk-off environment as investors are focusing on spiking yields and taking profits off the table as they are concerned about whether the bull market is actually coming to an end," said Ryan Nauman, market strategist at Informa Financial Intelligence in Zephyr Cove, Nevada.

The retreat on Wall Street was led by technology stocks, which dropped 2.33 percent, and the trade-sensitive industrial stocks that fell 2.22 percent.

Along with tech stocks, the FAANGs – Facebook, Amazon, Apple, Netflix and Alphabet – have led the market rally. The FAANGs, spread over three sectors, were down between 1.4 percent and 5.4 percent.

"If investors are going to take profits then it will be from some of the bigger, high-growth names," Nauman said.

At 12:22 a.m. ET the Dow was down 343.04 points, or 1.30 percent, at 26,087.53, the S&P was down 38.36 points, or 1.33 percent, at 2,841.98 and the Nasdaq was down 144.68 points, or 1.87 percent, at 7,593.34.

The small-cap Russell 2000 index, which is less sensitive than its larger peers to global worries such as trade and yields, was down 1.18 percent.

The CBOE Volatility Index, Wall Street's "fear gauge," rose 3.18 points to its highest since June 25.

The gainers in the sea of red were the defensive utilities and consumer staples.

The weakness in tech was led by semiconductor names after Swiss vacuum valve maker VAT Group said demand from chip equipment makers was softening.

The Philadelphia Semiconductor index sank 2.64 percent, with Intel down 2.0 percent and Nvidia 4.7 percent.

"It is a perfect storm for technology right now with the tariff war with China and weaker demand for chips," Nauman said.

Luxury stocks were another casualty of worries of slowing China demand, sparked by LVMH's results. Jeweler Tiffany, handbag makers Michael Kors and Tapestry tumbled between 4.9 and 7.2 percent.

Sears Holdings plunged 33.3 percent. The debt-laden retailer is preparing to file for Chapter 11 bankruptcy protection as early as Friday, sources said.

Declining issues outnumbered advancers for a 3.42-to-1 ratio on the NYSE and a 2.46-to-1 ratio on the Nasdaq.

The S&P index recorded 12 new 52-week highs and 39 new lows, while the Nasdaq recorded nine new highs and 167 new lows.

First Published:Oct 10, 2018 11:27 PM IST