Wall Street’s main indexes suffered their sharpest one-day declines in nearly six weeks on Wednesday after employment and manufacturing data suggested that the US-China trade war is taking an increasing toll on the US economy. Adding to trade concerns, the United States won approval on Wednesday to levy import tariffs on $7.5 billion worth of European goods over illegal EU subsidies handed to Airbus, threatening to trigger a tit-for-tat transatlantic trade war. All 11 major S&P sector indexes fell, with energy and financials each down more than 2 per cent.

The ADP National Employment Report showed private payrolls growth in August was not as strong as previously estimated, and said ‘businesses have turned more cautious in their hiring,’ with small enterprises becoming ‘especially hesitant.’ That added to fears sparked on Tuesday when a report showed US factory activity contracted to its lowest level in more than a decade.

The recent weak data has shaken investor faith in the strength of the domestic economy, which had shown relative resilience in the face of slowing global growth. Confidence in the US economy has helped support Wall Street this year. The focus is now on the US Labor Department’s more comprehensive jobs report on Friday for further clues on the health of the US economy.

The S&P 500 and the Dow slipped below their 100-day moving averages for the first time in about a month. Many investors believe that falling below such moving averages means the indexes are likely to fall further.

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