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Crypto stocks fall on lower bitcoin prices

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HSBC downgrades US stocks

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Nasdaq, S&P 500 hover near six-month lows

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Indexes down: Dow 1.54%, S&P 500 2.56%, Nasdaq 4.07%

(Updates to afternoon session)

By Johann M Cherian and Pranav Kashyap

March 10 (Reuters) - The tech-heavy Nasdaq led sharp

losses among major U.S. stock indexes on Monday, plunging 4% to

a near six-month low, on fears that U.S. President Donald

Trump's tariff policies would spark an economic slowdown.

The benchmark S&P 500 has fallen over 8% from its

February high. The Nasdaq confirmed a correction last week,

having tumbled more than 10% from its December all-time high.

Financial markets have been volatile in recent weeks as

rising trade tensions and signs of slowing U.S. economic growth

weighed on consumer confidence and business activity. Richly

valued U.S. tech stocks have borne the brunt of the recent

selloff on Wall Street.

"The Nasdaq has been risk-off all year long ... that's just

the unfortunate combination of very high valuations, which is

where we started the year, and then increased uncertainty just

in general," said Chris Zaccarelli, chief investment officer,

Northlight Asset Management.

In an interview on Sunday, Trump declined to predict whether

the U.S. could face a recession, at a time when investors are

concerned that his fluctuating trade policies on Mexico, Canada

and China could dampen consumer demand and corporate investment.

China's retaliatory tariffs on select U.S. imports are set

to take effect on Monday, with U.S. tariffs on certain base

metals anticipated later in the week.

The S&P 500 is also poised to close below its 200-day moving

average for the first time since November 2023. Analysts view

this as a crucial support level, with a break potentially

signaling a larger selloff ahead.

The CBOE Volatility Index, often dubbed Wall Street's

"fear gauge," surged over 3.6 points to hit 27, marking its

highest level since December 18.

A Reuters poll showed 91% of economists see higher recession

risks due to Trump's shifting trade policies. HSBC also

downgraded U.S. stocks, citing uncertainty around tariffs.

At 1:11 p.m. ET, the Dow Jones Industrial Average

fell 659.20 points, or 1.54%, to 42,139.77, the S&P 500

lost 147.97 points, or 2.56%, to 5,622.23 and the Nasdaq

Composite lost 740.45 points, or 4.07%, to 17,455.77.

An analyst also pointed to tech stocks coming under pressure

from a stronger Japanese yen and a spike in sovereign

bond yields, as investors unwound yen carry trades on

expectations of an upcoming interest rate hike in Japan.

The carry trades involve borrowing yen at a low cost to

invest in other currencies and assets offering higher yields.

"The carry trade is unwinding and all that hot money was in

Magnificent Seven stocks ... that's why tech is down," said

Thomas Hayes, chairman at Great Hill Capital LLC.

Heavyweight growth stocks such as Nvidia ( NVDA ) fell 5.2%,

while Microsoft ( MSFT ) and Amazon.com ( AMZN ) declined around

3.2% each.

The broader technology sector fell more than 4.5%,

while the small-cap Russell 2000 index dipped 2.1%.

JPMorgan Chase ( JPM ) and Goldman Sachs ( GS ) also

retreated, dragging down the broader banks index.

Defensive stocks such as consumer staples and

utilities were marginally higher.

Tesla was down 13%, lowest since October 2024,

after UBS cut its forecast for the automaker's first-quarter

deliveries.

Data on inflation, job openings and consumer confidence are

due later in the week.

On Friday, investors took some comfort from Fed Chair Jerome

Powell's comments that the economy was on a strong footing, but

he also underscored the need for caution on lowering borrowing

costs.

The Federal Open Market Committee will convene next week and

traders expect policy rates to be left unchanged for the first

half of this year, according to data compiled by LSEG.

Crypto stocks such as MicroStrategy ( MSTR ) slid 15.2%,

while Coinbase fell 11% tracking lower bitcoin

prices.

Declining issues outnumbered advancers for a 2.38-to-1 ratio

on the NYSE and a 3.49-to-1 ratio on the Nasdaq.

The S&P 500 posted 24 new 52-week highs and 10 new lows,

while the Nasdaq Composite recorded 26 new highs and 200 new

lows.