Selling intensified after Bloomberg reported the U.S.is preparing to announce by early December tariffs on all remaining Chinese imports if talks next month between presidents Donald Trump and Xi Jinping fail to ease the trade war.
A new list of tariffs would be drawn up on the remaining $257 billion of goods not yet facing tariffs and after a 60-day public comment period, they would go into effect around the Chinese lunar new year holidays in early February.
The Trump administration has already slapped tariffs on 250 billion dollars' worth of Chinese imports.
Among industrials, Boeing sank 6.6% to $335.59.
The price of US crude oil fell 0.8% to $67.04 a barrel in NY. The tech-heavy Nasdaq composite slid 116.92 points, or 1.6%, to 7,050.29.
Soyuz rocket: 'Faulty sensor' led to launch failure
Russian rockets are manufactured in Russia and then transported by rail to the Russia-leased Baikonur cosmodrome in Kazakhstan. Roscosmos , Russia's space agency, posted a video of the botched launch on Twitter on Thursday.
The response on Wall Street was to send the Dow plunging after it had opened by more than 300 points up. The Russell 2000 index of smaller-company stocks fell 6.51 points, or 0.4%, to 1,477.31.
The S&P 500 index shed 17.44 points, or 0.7 percent, to 2,641.25.
If president Trump's response is to intensify his trade war with the China, he will set up a vicious downward cycle, and where that will end should worry people. China's overnight repo rate surged the most in more than four years as authorities take steps to combat bets against the yuan, which held near the weakest level in a decade against the greenback.
The report of a further escalation in the trade row between the USA and China unsettled markets again.
USA equity futures advanced on Wednesday and European stocks jumped, tracking a rebound across Asia as the worst month for global equities in six years draws to a close.
Germany's DAX rose 1.2% as Volkswagen, Daimler and BMW made big gains. He said 70 percent of voters opposed the $13 billion project.Brazil's Bovespa rose in morning trading after far-right politician Jair Bolsonaro was elected president, but it later turned lower and lost 2.2 percent. Miners and energy companies led the way as nearly every sector on the Stoxx Europe 600 Index climbed. Stocks climbed earlier this month after Bolsonaro led the previous round of voting, as investors preferred him to leftist parties.Bond prices dipped. Brent crude, used to price worldwide oils, lost 19 cents to $77.18 per barrel.
CURRENCIES: The dollar strengthened to 112.95 yen from 112.37 yen late Monday.