Another day of big losses Friday left the US market with its worst week in more than seven years.
The benchmark S&P 500 index is now nearly 16 percent below the peak it reached in late September.
Major indexes fell more than 1 percent in midday trading Thursday, bringing their losses over the previous six days to about 6 percent. The S&P 500 index slumped 50.84 points to 2,416.58.
The Dow Jones Industrial Average ended 1.99 per cent lower at 22,859.60, a loss of 464.06 points. The Nasdaq fell 195 points, or 3 percent, to 6,332. The technology-heavy Nasdaq composite did even worse, and is now down 20 percent from its record high in August. Broad stock markets in the United States and Europe are on pace for the worst quarter since 2008, while the Dow finished its worst week since late 2008.
The major U.S. stocks indexes accelerated declines in the last hour of trading after White House trade adviser Peter Navarro said the United States and China might not reach a trade deal at the close of a 90-day negotiating window unless Beijing can agree to a profound overhaul of its economic policies.
He said speculation that the US economy could be headed for a recession has picked up, dampening global sentiment. In general, shutdowns don't affect the USA economy or the market much unless they stretch out for several weeks, which would delay paychecks for federal employees.
The increasing likelihood of a partial government shutdown injected further pessimism into U.S. stock markets.
Elliot Clarke, economist at Westpac, the banking group, added: "Political brinkmanship in Washington is further heightening market uncertainty".
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Furthermore, another drop in oil prices drove down energy stocks.
The S&P 500 index rose 8 points, or 0.3 percent, to 2,476.
The mood change has triggered a rush out of crowded trades, including massive long positions in US equities and the dollar and short positions in Treasuries.
Corrections are common during bull markets, and are seen as normal and even healthy.
By contrast, in that same period, the S&P 500 .SPX gained just 331 percent, with a total return of 425 percent. Amazon gave up 2.8 percent.
In France, the CAC 40 lost 1.8 percent and Germany's DAX fell 1.4 percent.
Brent Crude Oil prices also dropped to $46.16 after falling 2.5 percent. Benchmark U.S. crude fell 4.8 percent to $45.88 a barrel in NY, and it has dropped 40 percent since early October. Brent crude, used to price worldwide oils, slipped 5 percent to $54.35 a barrel in London.