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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 1.99%, S&P 500 2.75%, Nasdaq 4.18%

(Updates to mid-afternoon)

By Stephen Culp

NEW YORK, March 10 (Reuters) - U.S. stocks plunged on

Monday as relentless tariff wrangling and mounting anxieties

arising from the chaos in Washington gave rise to fears that the

U.S. economy could be careening into recession.

The previous week's steep sell-off resumed, gathering

momentum as the session progressed, with all three major U.S.

suffering sharp declines.

The tech-loaded Nasdaq suffered the most, tanking 4.2%, on

course for its biggest single-day percentage drop since

September 2022.

This, just days after the tech loaded index dipped more than

10% below its record closing high, confirming that it entered a

correction when it touched that high on December 19.

The S&P 500, coming off of its biggest weekly percentage

drop since September, is 8.5% below its record closing high

reached less than a month ago.

The bellwether index is on track to close below its 200-day

moving average, a closely watched support level, for the first

time since November 2023.

"Investors are continuing to assess this manufactured

correction - and I say manufactured because it was in a sense

brought on by the aggressive threats of global trade barriers

and tariffs," said Sam Stovall, chief investment strategist of

CFRA Research in New York.

"Bull markets don't die of old age, they die of fright and

what they're most afraid of is recession."

On Sunday, Trump declined to comment on the negative market

reaction to his on-again, off-again tariff actions against the

biggest U.S. trading partners, and whether anxieties related to

his erratic policy shifts could nudge a softening economy into

recession.

HSBC downgraded U.S. stocks, citing uncertainty around

tariffs.

But a Reuters poll of economists reflected the growing risks

of recession not only for the United States, but for Canada and

Mexico as well.

Tech stocks are coming under pressure from a stronger

Japanese yen and a spike in sovereign bond yields, as

investors unwind 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,

and that unwinding is at least partially responsible for the

selloff in tech stocks such as the "magnificent 7" group of

AI-related megacaps.

Adding instability to the mix, lawmakers on Capitol Hill are

scrambling to pass a spending bill in order to avert a

government shutdown.

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 CBOE Volatility Index, often called the "fear

index," surged over 3.6 points to hit 27, marking its highest

level since December 18.

The Dow Jones Industrial Average fell 850.91 points,

or 1.99%, to 41,951.76, the S&P 500 lost 158.76 points,

or 2.75%, to 5,611.50 and the Nasdaq Composite fell

760.96 points, or 4.18%, to 17,435.14.

Among the 11 major sectors of the S&P 500, tech shares were

down the most, falling 4.4%.

Tesla shares plummeted 14.0% as the electric

carmaker's luster dimmed in the wake of billionaire CEO Elon

Musk's scorched earth DOGE firings and protests arising from his

support of far-right political parties in Europe.

Coinbase and Microstrategy ( MSTR ), tracking

bitcoin weakness, dropped 14.9% and 17.1% respectively.

Declining issues outnumbered advancers by a 3.03-to-1 ratio

on the NYSE. There were 59 new highs and 213 new lows on the

NYSE.

On the Nasdaq, 863 stocks rose and 3,520 fell as declining

issues outnumbered advancers by a 4.08-to-1 ratio.

The S&P 500 posted 24 new 52-week highs and 13 new lows

while the Nasdaq Composite recorded 27 new highs and 227 new

lows.