US STOCKS-Wall Street falls on geopolitical tensions, recession fears

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* Rate-sensitive financials weigh on S&P 500, Dow
* Bond market rallies in flight to safe-haven assets
* All 11 major S&P sectors lose ground
* Indexes down: Dow 1.49%, S&P 500 1.23%, Nasdaq 1.20%

(Updates to market close)
By Stephen Culp
NEW YORK, Aug 12 (Reuters) - U.S. stocks dropped in a broad
sell-off on Monday as simmering geopolitical tensions spooked
equity investors and drove a bond market rally while the
protracted U.S.-China trade war stoked fears of impending
recession.
All three major U.S. stock indexes closed sharply lower in
light trading, with little to soothe market jitters over Hong
Kong protests, Argentine President Mauricio Macri's primary
election defeat, and the U.S.-China tariff dispute that has
rattled markets for months. "The stock market's selling off because the bond market is
rallying like crazy," said Brian Battle, director of trading at
Performance Trust Capital Partners in Chicago. "There's a flight
to safety and there are multiple silos of political
uncertainty."
"People are starting to give up and buy treasuries to wait
it out," Battle said. "Gold is a beneficiary too."
The flight from risk sent gold prices up 1%, hovering at a
more than six-year high. The closely-watched yield spread between U.S. 2-year and
10-year notes narrowed to its smallest difference since at least
2010, according to Refinitiv data. Goldman Sachs Group Inc GS.N said on Sunday that its
economists see recessionary risks increasing as the U.S.-China
trade war drags on. "What investors are coming to realize is that the goings on
outside U.S. borders is having an impact on global as well as
U.S. economic growth," said Paul Nolte, portfolio manager at
Kingsview Asset Management in Chicago. "Investors are coming
around to the fact that no matter where interest rates get
pegged it will not mitigate the trade issues."
Data on inflation, housing starts and retail sales are due
later in the week, and will be scrutinized for further signs of
economic softening.
The Dow Jones Industrial Average .DJI fell 391 points, or
1.49%, to 25,896.44, the S&P 500 .SPX lost 35.96 points, or
1.23%, to 2,882.69 and the Nasdaq Composite .IXIC dropped
95.73 points, or 1.2%, to 7,863.41.
All 11 major sectors of the S&P 500 ended the session in
negative territory, with financials .SPSY , materials
.SPLRCM , energy .SPNY and consumer discretionary .SPLRCD
suffering the largest percentage drops.
Second-quarter reporting season is approaching the finish
line, with 452 of the companies in the S&P 500 having reported.
Of those, 73.5% have beaten consensus estimates.
Looking ahead to the third quarter, there have been 58
negative pre-announcements compared with 19 positive, resulting
in a 3.1 negative-positive ratio, higher than 2.7 average since
1997, according to Refinitiv.
Streaming platform Roku Inc ROKU.O gained 7.2% after a
research note from Needham picked the stock over larger rival
Netflix Inc NFLX.O . Shares of Amgen Inc AMGN.O advanced 4.9% following a court
ruling that upheld two patents relating to its drug Enbrel.
Coach owner Tapestry Inc TPR.N and Versace owner Capri
CPRI.N dropped 3.9% and 4.4%, respectively, after Chinese
social media criticized the companies for selling T-shirts that
showed Chinese-controlled territories of Hong Kong and Macau as
countries. Media companies CBS Corp CBS.N and Viacom Inc VIAB.O are
in the final stages of negotiating an all-stock merger that
values Viacom at a discount to its Friday closing price, sending
Viacom shares down 4.9%. Declining issues outnumbered advancing ones on the NYSE by a
2.33-to-1 ratio; on Nasdaq, a 2.10-to-1 ratio favored decliners.
The S&P 500 posted 23 new 52-week highs and 22 new lows; the
Nasdaq Composite recorded 42 new highs and 170 new lows.
Volume on U.S. exchanges was 6.09 billion shares, compared
with the 7.24 billion average over the last 20 trading days.