NEW YORK U.S. and European shares tumbled on Tuesday on concerns that higher interest rates and pro-growth U.S. policies were on hold, boosting safe-haven Treasuries and gold and sending the dollar to a nearly four-month low against the yen.
The U.S. S&P 500 financial sector .SPSY fell as much as 3.1 percent and posted its biggest daily plunge in about nine months, contributing to the worst daily performance for the benchmark S&P 500 since Oct. 11.
Analysts attributed the selling to reduced confidence that U.S. President Donald Trump's pro-growth policies, including financial deregulation, would occur soon, and to concerns of a dovish Federal Reserve. The Fed stuck to its outlook for two more hikes this year last week, instead of the three expected by many market participants.
Investors also saw the Trump administration's struggles to push through the healthcare legislation overhaul as a sign he may also face setbacks delivering promised corporate tax cuts.
The tech-heavy U.S. Nasdaq Composite fell as much as 1.9 percent after hitting a record intraday high earlier on the back of a rise in Apple (AAPL.O) shares, which briefly touched a record $142.80 a share before falling 1.15 percent to close at $139.84.
Europe's broad FTSEurofirst 300 .FTEU3 stock index also fell after hitting a 15-month high, to close down 0.50 percent at 1,480.99.
"The market is starting to get a little fed up with the lack of progress in healthcare because everything else is being put on the back burner," said R.J. Grant, head of trading at Keefe, Bruyette & Woods in New York.
MSCI's all-country world equity index .MIWD00000PUS was last down 3.01 points, or 0.67 percent, at 448.05.
The Dow Jones Industrial Average .DJI ended down 237.85 points, or 1.14 percent, at 20,668.01. The S&P 500 .SPX closed down 29.45 points, or 1.24 percent, at 2,344.02. The Nasdaq Composite .IXIC ended down 107.70 points, or 1.83 percent, at 5,793.83.[nL2N1GY1MD]
Safe-haven gold, the yen and U.S. Treasuries all benefited. The dollar hit 111.55 yen JPY=EBS, its lowest since Nov. 28, while gold XAU= hit a more than two-week high of $1,247.60 an ounce and benchmark 10-year U.S. Treasury note yields US10YT=RR touched a nearly three-week low of 2.419 percent. [nL2N1GY1E5]
The euro EUR= hit $1.0819, its highest against the dollar since Feb. 2. [nL2N1GY1KZ] Centrist Emmanuel Macron cemented his position as front-runner in the first televised French presidential debate on Monday versus anti-European Union contender Marine Le Pen.
"It's probably going to take some sort of meaningful change in expectations around monetary or fiscal policy to revive the dollar and set it back on a strengthening trend," said Erik Nelson, a currency analyst at Wells Fargo in New York.
U.S. crude oil prices hit a one-week low of $47.23 a barrel as concerns about new supplies overshadowed the latest talk by OPEC that it was looking to extend output cuts beyond June.[nL3N1GY1ET]
Brent crude LCOc1 settled down 66 cents, or 1.28 percent, at $50.96 a barrel. U.S. crude CLc1 settled down 88 cents, or 1.82 percent, at $47.34, which marked the lowest settlement price since November.
(Additional reporting by Dhara Ranasinghe in London and Saqib Iqbal Ahmed, Scott DiSavino and Chuck Mikolajczak in New York; Editing by Nick Zieminski and James Dalgleish)