Updates to market close

By Stephen Culp

NEW YORK, March 10 (Reuters) - U.S. stocks plunged on Monday as relentless tariff wrangling and mounting anxieties from a possible federal government shutdown gave rise to fears that the U.S. economy could be careening into recession.

The previous week's steep selloff resumed, gathering momentum as the session progressed, with all three major U.S. suffering sharp declines.

On Thursday, the tech-loaded index dipped more than 10% below its record closing high, confirming that it entered a correction when it touched that high on December 19.

The bellwether S&P 500 closed below its 200-day moving average, a closely watched support level, for the first time since November 2023.

"It's a material drop for one day but we're seeing the normal sort of drawdown that you see in an upmarket," said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management in Minneapolis. "Concerns are mounting and investors are moving to the sidelines, but we haven't seen growth worries manifest in data yet."

On Sunday, Trump declined to comment on the negative market reaction to his on-again, off-again tariff actions against the biggest U.S. trading partners, and whether anxieties related to his erratic policy shifts could nudge a softening economy into recession.

HSBC downgraded U.S. stocks, citing uncertainty around tariffs.

But a Reuters poll of economists reflected the growing risks of recession for the United States, Canada and Mexico.

Tech stocks are under pressure from a stronger Japanese yen JPY= and a spike in sovereign bond yields, as investors unwind yen carry trades on expectations of an upcoming interest rate hike in Japan.

The carry trades involve borrowing yen at a low cost to invest in other currencies and assets offering higher yields, and that unwinding is at least partially responsible for the selloff in tech stocks such as the "Magnificent 7" group of artificial intelligence-related megacaps.

"If you want to know what's going on with the U.S. market, stop paying attention to tariffs and start paying attention to Japanese government bond yields," said Thomas Hayes, chairman at Great Hill Capital in New York. "The carry trade is unwinding, and all that hot money was in Mag 7. So that's why tech is down."

Adding instability to the mix, lawmakers on Capitol Hill are scrambling to pass a spending bill to avert a government shutdown.

China's retaliatory tariffs on select U.S. imports are set to take effect on Monday, while U.S. tariffs on certain base metals are anticipated later in the week.

According to preliminary data, the S&P 500 .SPX lost 155.21 points, or 2.69%, to end at 5,614.99 points, while the Nasdaq Composite .IXIC lost 726.01 points, or 3.99%, to 17,470.21. The Dow Jones Industrial Average .DJI fell 890.63 points, or 2.08%, to 41,911.09.

Tesla TSLA.O shares plunged as the electric carmaker's luster dimmed in the wake of billionaire CEO Elon Musk's Department of Government Efficiency firings and protests arising from his support of far-right political parties in Europe.

Shares of Coinbase COIN.O and Microstrategy MSTR.O slid, tracking bitcoin weakness.

(Reporting by Stephen Culp; Additional Reporting by Nikhil Sharma, Johann M Cherian, Pranav Kashyap and Lisa Mattackal in Bengaluru; editing by Richard Chang)

((stephen.culp@thomsonreuters.com; 646-223-6076))