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On the first trading day of April, which is also the first trading day of the second quarter, stocks tanked thanks to a combination of anxiety about a trade war, and fears about the tech industry getting hit with regulation.
The Dow Jones industrial average plunged 458.92 points to close at 23,644.19, with Intel as the worst-performing stock in the index. The 30-stock index fell as much as 758.59 points and hit a new low for the year on Monday, falling at one point below the intraday low touched during the slide in February.
The S&P 500 dropped 2.2 percent to 2,581.88 and re-entered correction territory, with tech falling 2.5 percent. The index also closed below its 200-day moving average, a key technical level, for the first time since June 2016. The Nasdaq composite dropped 2.7 percent to 6,870.12 as Amazon declined 5.2 percent.
The Nasdaq closed in correction territory for the first time.
"The market leaders are under pressure," said Marc Chaikin, CEO of Chaikin Analytics. "It's a situation where the proven winners for the past few years are faltering." When that happens, "there is a negative psychological sense in the market."
Amazon fell after President Donald Trump tweeted on Saturday that Amazon was scamming the U.S. Postal Service, adding the service loses "billions of dollars" delivering packages for the e-commerce giant. Amazon has been one of the best-performing stocks over the past year, rising nearly 64 percent in that time period.
Facebook, Netflix and Alphabet also closed sharply lower, dropping 2.8 percent, 5.1 percent and 2.4 percent, respectively. Last month, concerns over how Facebook handles data collected from its users sent the entire sector lower. Facebook dropped 10.4 percent in March.
Snap's stock also fell 8.9 percent Monday after MoffettNathanson reiterated its sell rating, noting it found students were "uniformly disapproving" of the company's app redesign.
Intel dropped 6.1 percent after Bloomberg reported Apple would use its own chips for Mac computers, ditching Intel. The Dow hit its lows of the day on the back of the report.
Traders also fretted over the possibility that a trade war may be brewing.
China announced overnight Monday it had implemented tariffs on 128 types of U.S. imports. The goods hit with the charges the list of products proposed by Beijing in March and comes as a direct response to Trump signing off on tariffs on imported steel and aluminum last month. China said in March that those goods had an import value of $3 billion in 2017.
Trade worries also remained after Trump linked his proposal to build a border wall between the U.S. and Mexico to ongoing NAFTA negotiations between the two countries. In a tweet Sunday, Trump said: "They must stop the big drug and people flows, or I will stop their cash cow, NAFTA. NEED WALL!"
"The new bearish narrative is that tariffs implemented by the Trump administration will spur a global trade war that would spiral the world into a recession," said Nick Raich, CEO of The Earnings Scout. "We understand the fear. We get how bad a global trade war would be on future profits."
However, "despite fears of a global trade war, guidance among the early reporting companies are taking earnings growth expectations higher," said Raich, noting companies are getting a substantial boost from lower corporate taxes.
In economic news, the IHS Markit U.S. manufacturing PMI rose to 55.6 in March, its highest level since 2015. Meanwhile, the ISM manufacturing index reached 59.3 last month. Economists expected the number to hit 60.0.
—CNBC's Cheang Ming contributed to this article.