US stocks have fallen, breaking a four-session streak of gains after Washington's threat to impose tariffs on an additional $US200 billion ($A270 billion) worth of Chinese goods fanned trade war fears, while a sharp drop in oil prices hit energy shares.
China responded to US President Donald Trump's threats by accusing the US of bullying and warned that it would hit back.
Industrial names including Boeing, 3M and Caterpillar, which have been among the hardest hit by the recent trade dispute, were among the Dow's biggest drags.
Materials, down 1.7 per cent, was another big negative influence on the market, with Freeport-McMoRan down 3.9 per cent as copper prices hit their lowest in about a year.
Investors said trade war worries may slip to the background as investors begin to focus more closely on second-quarter earnings over the coming weeks. Results from JPMorgan Chase and other big banks are due on Friday.
"The trade situation is worrisome but nothing more is going to happen right away. This story may recede in people's consciousness while current stories capture people's interests, particularly earnings," said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston.
"People are looking for some fairly strong earnings, and there's certainly potential for disappointment."
Analysts are forecasting S&P 500 companies' earnings grew about 21 per cent in the second quarter from a year earlier, according to Thomson Reuters data.
Also pressuring the market on Wednesday, the S&P 500 energy index fell 2.2 per cent, leading sector declines. US crude oil futures settled down 5 per cent on the trade dispute escalation and as expectations of growing supplies increased on news that Libya would reopen ports.
The Dow Jones Industrial Average fell 219.21 points, or 0.88 per cent, to 24,700.45, the S&P 500 lost 19.82 points, or 0.71 per cent, to 2,774.02 and the Nasdaq Composite dropped 42.59 points, or 0.55 per cent, to 7,716.61.
Chipmakers, which largely depend on China for their revenue, fell, with the Philadelphia semiconductor index down 2.6 per cent.
The market's drop was not as steep as what was seen in late March and early April when the escalating trade rhetoric between China and the US led to the S&P falling more than 2 per cent on four occasions.
The market slide may have been contained in part by speculation the Trump administration could change its mind by the end of August, when the tariffs are due to come into effect, some strategists said.
The utilities sector was the only one in positive territory, with a 0.9 per cent gain.
Twenty-First Century Fox fell 4 per cent after the media company raised its offer for Britain's Sky, seeing off rival bidder Comcast for now. Comcast shares were up 1.3 per cent.
Declining issues outnumbered advancing ones on the NYSE by a 2.74-to-1 ratio; on Nasdaq, a 1.87-to-1 ratio favoured decliners.
The S&P 500 posted 13 new 52-week highs and one new low; the Nasdaq Composite recorded 63 new highs and 51 new lows.
About 6.0 billion shares changed hands on US exchanges. That compares with the 6.9 billion daily average for the past 20 trading days, according to Thomson Reuters data.