The Nasdaq has tumbled 1.6 per cent, confirming a correction as it was dragged down by Alphabet, Facebook and on fears the companies are targets of US government antitrust regulators.

While the sell-off in the internet heavyweights was the biggest drag on the Nasdaq, the index has been falling steadily since its May 3 record closing high as investors worried about slowing global growth amid an escalating US-China trade war.

The S&P500 had a volatile session and ended the day down 0.3 per cent, but the Dow Jones Industrial Average ended the session virtually unchanged.

“The slump has been concurrent with fears of slowing global growth,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama. He noted that weak manufacturing data around the world appeared to be confirming those fears.

“Right now Nasdaq is basically where we were at the lows in March. This is an important level to hold here. If we break below that, we fall further. Tomorrow will be an important day to see if the trend continues lower.”

The Dow Jones Industrial Average rose 4.74 points, or 0.02 per cent, to 24,819.78, the S&P500 lost 7.61 points, or 0.28 per cent, to 2744.45 and the Nasdaq Composite dropped 120.13 points, or 1.61 per cent, to 7333.02 which was 10.2 per cent lower than its May 3 close.

A correction is defined as a 10 per cent drop from the most recent 52-week high.

The benchmark S&P500 swung in and out of negative territory during the day as investors monitored the latest comments around the US trade battles with both China and Mexico, as well as US President Donald Trump’s decision on Friday to end preferential trade treatment for India.

“We’re surprised the market didn’t take a sourer tone today not only with China digging in, the Mexico headlines and the US revoking India’s status as a developing country,” said John Augustine, chief investment officer at Huntington National Bank in Columbus, Ohio. He also cited weak manufacturing data.

“Investors must be thinking in some form that this is as bad as the headlines and economic reports are going to get this week,” Augustine said.

An ISM survey showed US manufacturing growth unexpectedly slowed in May, driving demand for the safety of government bonds. Two-year yields hit their lowest since September 2017 on growing conviction that the Federal Reserve will start cutting interest rates to stave off a recession.

High-profile internet stocks dominated trading, with Facebook Inc closing down 7.5 per cent after the Wall Street Journal reported that the Federal Trade Commission has secured the right to examine how the social media company’s practices affect digital competition. The stock was on pace for its biggest one-day drop since July 26.

Alphabet Inc tumbled 6 per cent after sources told Reuters the US Justice Department is preparing an investigation to determine if the Google parent broke antitrust laws. fell 4.6 per cent on a report that the e-commerce giant could be put under the watch of the FTC.

The communication services sector, which includes Google and Facebook, closed down 2.8 per cent, the biggest drop of the S&P’s 11 major sectors, while Amazon shares helped pull the consumer discretionary sector down 1.2 per cent.

The S&P materials sector was the biggest percentage gainer of the S&P’s major sectors, with a 3.4 per cent advance. Dupont’s 11.5 per cent gain accounted for roughly half of the sector’s rise in the first trading session after it spun off its Corteva Inc agriculture business.

Healthcare was one bright spot for the Nasdaq, with the Nasdaq biotech index climbing 1.2 per cent, helped by shares of companies including Amgen Inc and Gilead. Amgen and Merck & Co reported positive drug data at the annual American Society of Clinical Oncology meeting in Chicago.

Amgen jumped 3.4 per cent after its drug showed a high response rate in a small lung and colon cancer trial, while Merck rose 1.3 per cent after data showed nearly a quarter of patients who received immunotherapy Keytruda as an initial treatment for advanced lung cancer were still alive after five years.

The S&P500 posted 17 new 52-week highs and 21 new lows; the Nasdaq Composite recorded 24 new highs and 170 new lows.

On US exchanges 8.34 billion shares changed hands compared with the 7.11 billion average for the last 20 sessions.