US STOCKS-Wall St shudders as U.S.-China trade war intensifies

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* China to impose tariffs on $60 bln worth of U.S. goods
* Nasdaq sees worst percentage drop of the year
* Tariff-sensitive tech, industrials hit hardest
* Uber falls for second day after underwhelming IPO
* Indexes drop: Dow 2.38%, S&P 2.41%, Nasdaq 3.41%

(Updates to market close)
By Stephen Culp
NEW YORK, May 13 (Reuters) - Wall Street sank on Monday
after China defied Washington by announcing retaliatory tariffs,
the latest salvo in the two countries' increasingly belligerent
trade war, sending investors fleeing equities for less risky
assets.
All three major U.S. indexes lost ground in a widespread
sell-off, with the tech-heavy Nasdaq posting its biggest one-day
percentage loss this year. The S&P 500 and the Dow both had
their largest percentage drop since Jan 3.
China said it would impose higher tariffs on $60 billion in
U.S. goods despite President Donald Trump's warnings not to
retaliate against additional tariffs on Chinese imports
announced by the White House on Friday. The move
stoked fears of a global economic downturn.
"The market's realizing that this was an absolute breakdown
of (trade) talks and everything is gone backwards," said Michael
O'Rourke, chief market strategist at JonesTrading in Greenwich,
Connecticut.
"It could be very bad," O'Rourke added. "There's a lot of
uncertainty. This should lead to further slowing in the
economy."
Investors responded by fleeing equities for safe-haven
assets.
U.S. Treasury yields fell to six-week lows, with 10-year
yields falling below those of 3-month bills, an inversion seen
by many as a potential harbinger of recession.
Gold prices rose to a near three-month high. The CBOE Volatility index .VIX , a gauge of investor
anxiety, posted its biggest daily point gain so far this year.
The Dow Jones Industrial Average .DJI fell 617.38 points,
or 2.38%, to 25,324.99, the S&P 500 .SPX lost 69.53 points, or
2.41%, to 2,811.87 and the Nasdaq Composite .IXIC dropped
269.92 points, or 3.41%, to 7,647.02.
Of the 11 major sectors of the S&P 500, only utilities
.SPLRCU ended the session in the black. Trade-sensitive tech
companies .SPLRCT suffered the largest percentage decline.
Among stocks particularly vulnerable to U.S.-China tariffs,
Boeing Co BA.N slid 4.9% and Caterpillar Inc CAT.N fell 4.6%
while the Philadelphia Chip index .SOX was down 4.7%, posting
its biggest percentage drop since Jan. 3 and extending last
week's 6% decline. Shares of Apple Inc AAPL.O sank 5.8% on the double whammy
of heightened trade tensions and a decision by the U.S. Supreme
Court to allow an antitrust lawsuit accusing the company of
monopolizing the iPhone app market. Uber Technologies Inc UBER.N extended its slide, falling
10.8% on its second day as a publicly traded company following
Friday's underwhelming debut. Ride-hailing peer Lyft Inc LYFT.O was also down, dropping
5.8%.
Shares of Tesla Inc TSLA.O fell 5.2% to their lowest in
more than two years. First quarter reporting season is in the home stretch, and
of the 451 companies in the S&P 500 that have posted results,
75.2% have come in above expectations.
Analysts now see an S&P 500 earnings increase of 1.3% for
the January-March period, significantly better than the 2%
decrease expected on April 1.
Declining issues outnumbered advancing ones on the NYSE by a
4.81-to-1 ratio; on Nasdaq, a 5.12-to-1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and 22 new lows; the
Nasdaq Composite recorded 30 new highs and 151 new lows.
Volume on U.S. exchanges was 8.24 billion shares, compared
to the 6.97 billion-share average over the last 20 trading days.