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Dow falls 320 points after the weakest manufacturing value in 10 years

Equities fell lower on Tuesday, the first trading day of the fourth quarter, as disappointing production data worried the US economy, or 1.2% after a rally of more than 100 points earlier in the day. The S & P 500 slipped 1.1%. The Nasdaq Composite fell 0.9%. The major averages reached their lows of the day at 13:00. ET.

Equities from manufacturers such as Honeywell, 3M and Eaton fell by at least 2.2% with the data release.

The Institute for Supply Management announced that US manufacturing activity has fallen to its worst level since June 2009. The ISM report follows the publication of weak manufacturing data from Europe. ISM chairman Timothy Fiore said in a statement that trade is affecting production.

"The manufacturing side tells us something. It's a combination of global growth and we have a trade war that lasts one and a half years, "said Christian Fromhertz, CEO of Tribeca Trade Group. The longer this trade war lasts, the more damage it inflicts. "

US Chinese negotiators are expected to meet next week in Washington to discuss a potential trade agreement between the world's largest economies The two sides have imposed tariffs on each other's billions of dollars' worth of goods.

However, sentiment about these talks has improved lately, a US Treasury spokeswoman said the White House "is not considering at present "To prevent Chinese companies from listing shares on the US stock exchanges." The 1

0-year yield fell to 1.62% after rising to 1.62% .The 2-year rate fell from around 1, 68% to 1.54%.

Investors started the fourth quarter with the greatest difficulty reaching record highs at the beginning of the year, with the Dow and the S & P 500 down several failed attempts to break them, more than 1% above their all-time high on Tuesday. The Nasdaq was about 4% below its record.

"Historically, the fourth quarter was one of the best periods for equities," said Keith Lerner, chief market strategist at SunTrust Private Wealth, in a note. "Before the end of the year, we could certainly experience another setback. There were only two setbacks of more than 5% for the S & P 500 this year, compared to a historical average of about three. "

of the 2018 sell-out," Lerner said.

In corporate news, the Charles Schwab shares fell nearly 10% after the broker announced that commissions on stock trading had ceased. TD Ameritrade dropped more than 20% on the news, while E-Trade slid 17%.

– Silvia Amaro of CNBC contributed to this report.

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