* China vice premier to visit U.S. for trade talks
* Ten S&P sectors post more than 1% fall
* Mylan tumbles after revenue misses estimates
* AIG gains after quarterly profit beat
* Indexes down: Dow 2.15%, S&P 500 2.09%, Nasdaq 2.52% (Updates to late afternoon trading, changes byline, adds NEW YORK to dateline)
By April Joyner
NEW YORK, May 7 (Reuters) - U.S. stocks tumbled more than 2 percent on Tuesday as escalating trade tensions between the United States and China triggered global growth fears and kept investors away from riskier assets.
The S&P 500 and the Dow Jones Industrial Average were on pace for their second-biggest daily percentage drop of the year.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin said late on Monday that China had backtracked from commitments made during trade negotiations. Those comments followed President Donald Trump’s unexpected statement on Sunday that he would raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent.
Monday’s comments from Lighthizer and Mnuchin raised concerns among several investors that Trump’s statement could in fact be a sign of an impasse in trade talks between China and the United States.
“Most investors thought yesterday that (Trump’s) announcement was probably a negotiating tactic and that increased tariffs weren’t likely to go into effect,” said Kate Warne, investment strategist at Edward Jones in St. Louis.
“Week after week, we’ve heard there has been progress and that a deal would be reached,” she said. “Now the goalposts have moved. There’s been quite a shift in expectations.”
Still, Beijing said that Chinese Vice Premier Liu He will visit the United States on Thursday and Friday for trade talks. Additional tariffs are set to take effect on Friday if a trade agreement is not reached by then.
The confirmation that Liu would travel to Washington did little to calm markets, however. Trade-sensitive industrial and technology stocks led in percentage declines among the S&P 500’s major sectors. All 11 sectors were in the red, with only utilities falling less than 1%.
Shares of Boeing Co, the largest U.S. exporter to China, slipped 4.1%, and shares of Caterpillar Inc, another industrial stalwart sensitive to China, declined 3.0%. Among technology stocks, Microsoft Inc shares slid 2.8%, while Apple Inc shares dropped 3.4%. Microsoft and Apple were the top two drags on the S&P 500.
The CBOE Volatility Index, a gauge of investor anxiety, spiked to its highest level in more than three months.
The Dow Jones Industrial Average fell 568.32 points, or 2.15%, to 25,870.16, the S&P 500 lost 61.41 points, or 2.09%, to 2,871.06 and the Nasdaq Composite dropped 204.52 points, or 2.52%, to 7,918.77.
In a bright spot, American International Group Inc shares jumped 7.3% after the insurer reported a quarterly profit that blew past expectations.
With earnings season now in its homestretch, profit estimates for the first quarter are now up 1.2%, a sharp improvement from the 2.3% decline expected at the start of the earnings season.
Of the 414 S&P companies that have reported earnings so far, about 75% have surpassed analysts’ estimates, according to Refinitiv data.
Conversely, Mylan NV shares tumbled 20.4%, the most among S&P 500 companies, after the drugmaker reported lower-than-expected quarterly revenue and failed to provide greater clarity on a potential revamp of the company’s strategy.
Declining issues outnumbered advancing ones on the NYSE by a 4.83-to-1 ratio; on Nasdaq, a 3.63-to-1 ratio favored decliners.
The S&P 500 posted four new 52-week highs and seven new lows; the Nasdaq Composite recorded 43 new highs and 50 new lows. (Reporting by April Joyner in New York; Additional reporting by Amy Caren Daniel and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta, Arun Koyyur and Jonathan Oatis)