The Nasdaq plummeted 820.20 points or 3.7 percent to 22,204.43, the S&P 500 tumbled 182.60 points or 2.7 percent to 6,552.51 and the Dow slumped 878.82 points or 1.9 percent to 45,479.60.

Wall Street saw a sell-off after President Donald Trump threatened to retaliate against China's new export controls on rare earths. Calling China 'very hostile,' he announced plans for a 'massive increase' in tariffs and canceled a meeting with President Xi Jinping. The move sparked fears of a renewed U.S.'China trade war, shaking investor confidence and prompting traders to lock in recent market gains amid valuation concerns.

University of Michigan released a report that showed its reading on U.S. consumer sentiment was virtually unchanged in the month of October. its consumer sentiment index edged down to 55.0 in October from 55.1 in September. On the inflation front, the University of Michigan said year-ahead inflation expectations ebbed to 4.6 percent in October from 4.7 percent in September. Long-run inflation expectations held steady at 3.7 percent.

Semiconductor and computer hardware stocks witnessed substantial weakness, with the Philadelphia Semiconductor Index and the NYSE Arca Computer Hardware Index plummeting by 6.3 percent and 5.8 percent. Oil service stocks moved sharply lower along with the price of crude oil, dragging the Philadelphia Oil Service Index down by 5.4 percent to its lowest closing level in nearly two months. Steel, networking, banking and transportation stocks also showed significant moved to the downside, as broad based weakness emerged on Wall Street.

Asia-Pacific stocks moved mostly lower. Japan's Nikkei 225 Index slumped by 1.0 percent, while Hong Kong's Hang Seng Index plunged by 1.7 percent. The major European markets too moved downwards while the U.K.'s FTSE 100 Index slid by 0.9 percent, the German DAX Index and the French CAC 40 Index both tumbled by 1.5 percent.

In the bond market, treasuries surged in reaction to Trump's threats against China. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, plunged 9.7 bps to 4.05 percent, hitting its lowest closing level in well over three weeks.

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