US stocks fall on worries about Saudi Arabia

Stocks opened lower but fell much further at midday after Treasury Secretary Steven Mnuchin announced he was withdrawing from a big investment summit in Saudi Arabia.

The announcement was the most concrete sign the Trump administration is distancing itself from Saudi Arabia since Khashoggi's disappearance this month intensified scrutiny of the big oil exporter.

At around the same time, European Central Bank Chief Mario Draghi reportedly told EU leaders at a Brussels summit that nations should adhere to the EU's budget rules - comments that were seen as a swipe at Italy, which plans a steep increase in deficit spending.

Worries about the EU and Saudi Arabia added to concerns about higher US interest rates and the fallout from trade conflicts, worries that more than offset generally solid earnings reports.

"No matter what companies report, the market is not going to respond favorably," said Tom Cahill of Ventura Wealth Management. "People are on edge and they're willing to sell first and ask questions later."

Jack Ablin, chief investment officer at Cresset Wealth Advisors, said there were new questions about the US relationship with Saudi Arabia at a time when the Trump administration's aggressive trade policies already had raised uncertainty.

"There's just heightened global tensions," Ablin said. "Countries are moving apart rather than coming together."

The Dow Jones Industrial Average ended down 1.3 percent at 25,379.45.

The broad-based S&P 500 dropped 1.4 percent to 2,768.78, while the tech-rich Nasdaq Composite Index sank 2.1 percent to 7,485.14.

Large technology companies were especially weak, with Apple falling 2.3 percent, Amazon 3.3 percent, Netflix 4.9 percent and Tesla Motors 2.9 percent.