Stocks fell sharply on Thursday as investors started to fear the U.S.-China trade war is slowing the economy.

The Dow Jones Industrial Average fell 286.14 points to 25,490.47 as United Technologies lagged. The fell 1.2% to 2,822.24 while the Nasdaq Composite dropped 1.6% to 7,628.28. The Dow fell more than 400 points at its lows, but regained some of its losses in the final hour of trading as Intel shares turned around to close 1.2% higher.

The Dow is now down more than 380 points in two days as Wall Street begins to realize the trade war may last a lot longer than previously expected. Bond yields and crude oil also plunged on Thursday as the rising risk spread through other markets. The 10-year yield fell to its lowest since October 2017. The S&P 500 is down more than 4% so far in May along with the Dow.

"The trade landscape looks bleaker than ever," said Adam Crisafulli, executive director at J.P. Morgan, in a note. "Anyone bullish on the SPX has to be conducting a lot of soul searching at the moment."

Crisafulli also pointed out that data from around the world is indicating an economic rebound from earlier this year is "showing signs of attenuating" while the Federal Reserve is in no hurry to cut rates.

IHS Markit said on Thursday that U.S. manufacturing activity grew at its slowest pace since September 2009 this month. The data led investors to load up on Treasurys.

As yields fell on the weak economic data, bank shares including J.P. Morgan Chase and Bank of America were hit.

Shares of Apple, hit hard this month on trade war fears, fell another 1.7% after a UBS analyst cut his price target on the iPhone maker to $225 per share from $235. The analyst kept his buy rating on the stock, but noted that "a slightly lower multiple is prudent given soft smartphone market and ongoing US/China trade issues."

Shares of Qualcomm fell 1.5% while Xilinx closed 2.3% lower. Micron Technology and Lam Research declined 2.6% and 0.9%, respectively.