The ECB also pushed out the timeline on its first post-crisis rate hike to at least next year, adding to a cocktail of concerns over trade tensions, Brexit and global growth risks, which have weighed on markets over the past year.
U.S. 10-year Treasury yields ticked lower to hit a one-week low at 2.6591 percent. The interest rate sensitive financial sector dropped 1.4 percent, the most among the S&P sectors weighed by a fall in Wall Street’s big lenders.
Bank of America Corp, JPMorgan Chase & Co, Morgan Stanley, Citigroup Inc and Morgan Stanley fell between 0.70 percent and 1.40 percent.
ECB President Mario Draghi also announced cuts to the bank’s growth and inflation targets and said, “We are (in) a period of continued weakness and pervasive uncertainty.”
“ECB is saying we need to prop up the economy by offering cheaper loans and that can only happen when you have a problem with the economy, when the economy is slowing,” Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“You have yields going down, which means the Fed might have to stay on hold even longer than what they are anticipating.”
At 9:53 a.m. EDT the Dow Jones Industrial Average was down 251.58 points, or 0.98 percent, at 25,421.88, the S&P 500 was down 25.46 points, or 0.92 percent, at 2,745.99 and the Nasdaq Composite was down 78.80 points, or 1.05 percent, at 7,427.12.
Also pushing markets lower were technology companies which slipped 0.93 percent, hurt by a fall in marquee names including Apple Inc and Microsoft Corp.
Only the defensive utilities and real estate sectors were trading higher.
The three main indexes were set for its fourth day of losses, after a rally in the S&P 500, which was powered by optimism over trade negotiations and a dovish stance by the Federal Reserve, has lost its steam. The benchmark index has risen about 10 percent so far this year.
Among stocks, Kroger Co tumbled 13.1 percent after the supermarket chain projected annual earnings below Wall Street forecasts.
Burlington Stores Inc dropped 12.1 percent after the off-price retailer’s quarterly revenue missed estimates and forecast slower comparable sales growth in 2019.
Declining issues outnumbered advancers for a 3.07-to-1 ratio on the NYSE and for a 3.04-to-1 ratio on the Nasdaq.
The S&P index recorded 14 new 52-week highs and four new lows, while the Nasdaq recorded seven new highs and 32 new lows.
Reporting by Medha Singh and Amy Caren Daniel in Bengaluru; Editing by Arun Koyyur