The Dow Jones plummeted by 400 points upon opening in New York on Thursday before falling by a further 325 points.
Today’s massive price fall follows an 800-point plunge on Tuesday, bringing the Dow’s total loss to more than 1,500 points in just two days.
Wednesday’s market was closed due to the funeral of President George HW Bush.
As of 5.30pm GMT, the Dow was 24,484.50, according to Bloomberg data.
And it was not just the Dow Jones which was hit – the Nasdaq Composite fell by nearly two percent earlier today.
The S&P 500 also dropped by about 1.5 percent upon opening, although it has since recovered to 2,650.20.
Emerging market stocks lost 2.76 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.28 percent lower, while Japan’s Nikkei lost 1.91 percent.
Today’s woeful trading means the Dow and S&P 500 are now likely to make losses for the year.
Why is the Dow Jones falling today? How far will it fall?
Market losses are being blamed on rising fears of a trade war between Washington and Beijing, fuelled by the detention of a Chinese executive in Canada.
Meng Wanzhou, chief global finance officer of Chinese telecoms company Huawei, was arrested by Canadian authorities on December 1 over alleged violations of US sanctions, reports say.
She now faces extradition to the United States.
China has demanded the finance officer’s release, stating neither Canada or the United States has offered a reason for her arrest.
Concerns over US-China trade talks were already rife since last weekend’s G20 economic summit – but now look increasingly uncertain.
Adrian Lowcock, Head of Personal Investing at Willis Owen, said: “Optimism over a ceasefire in the US-Chinese trade war has proven very short-lived with the arrest of Huawei’s CFO in Canada, putting a reconciliation in greater doubt.
“Investor sentiment has swung downwards with concerns that a revived trade war could impact global growth, which has already begun to slow.”
With uncertainty still on-going it is possible the market could slump further.
What else is behind the price falls?
The US-China trade saga is not the only thing spooking investors – the tanking of oil prices is also causing concerns.
Prices have dipped by more than 4 percent to just over £$50 a barrel after producers delayed a supply announcement in the wake of falling demand.
A delegate for the OPEC (Organisation of the Petroleum Exporting Countries) said a deal was being sought to cut oil output but had not been agreed.