Stocks plunge as weak manufacturing data highlights the pain of the trade war

• Stocks plummeted on Tuesday after the Institute for Supply Management said its widely-followed purchasing managers index fell for the first time since January 2016 for the month of August.
• The contraction came as the US-China trade war took its toll on US producers.
• New tariffs on billions of dollars worth of products went into effect on September 1 in the latest escalation of a more than yearlong trade spat.
• President Trump also hinted that the trade conflict could last until 2020, and said that it would be "MUCH TOUGHER," to strike a deal with China if he were to be re-elected.
• Visit the Markets Insider homepage for more stories.

Stocks tumbled on Tuesday as weak factory data for August signaled the trade war is dampening demand for products from US manufacturers.

The Institute for Supply Management said its closely-watched purchasing managers index slid for the first time since January 2016. The index fell to 49.1 in August, and readings below 50 typically indicate the manufacturing economy is contracting.

The data also showed that US manufacturers are receiving fewer orders. The new orders index index fell to 47.2 in August, down from 50.8 in July. It's the first time the gauge has dropped below 50 since December 2015.

Markets Insider is looking for a panel of millennial investors. If you're active in the markets, CLICK HERE to sign up.

Respondents to the ISM's survey of more 300 purchasing managers and supply chain executives said that trade remains the most significant issue for their businesses. The disappointing data comes shortly after the US and China imposed a new round of tariffs billions of dollars of products starting September 1.

President Trump suggested the trade conflict with China could last until 2020, and said that it would be "MUCH TOUGHER," to strike a deal if gets elected to a second term.

"And then, think what happens to China when I win. Deal would get MUCH TOUGHER!" the president wrote in a number of tweets on Tuesday. "In the meantime, China's Supply Chain will crumble and businesses, jobs and money will be gone!"

Here's a look at the major indexes as of the 4 p.m. close on Tuesday:

• The S&P 500 declined 0.69%, to 2,906.27.
• The Dow Jones Industrial Average fell 1.08%, to 26,118.02.
• The Nasdaq Composite slide 1.11%, to 7,874.16.

Analysts from UBS predict Hurricane Dorian could cost insurance companies more than $25 billion as the storm makes it way to Florida's eastern coast. The firm increased its loss estimate and now expects the hurricane to inflict between $5 billion and $40 billion worth of damage. It also lifted its base case for the damage to $25 billion, up from $15 billion.

One of the last analysts covering Mallinckrodt, a large opiate producer, lowered his price target for the drugmaker to $1 and said company's shares could fall to $0. Mallinckrodt's stock price has cratered 85% this year due to its role in the opioid crisis.

Within the S&P 500, these were the largest gainers:

• Davita: 3.8%
• American Tower: 3.3%
• Everest Reinsurance: 3.1%

And the largest decliners:

• Alexion Pharmaceutical: (-5.5%)
• IPG Photonics: (-5.2%)
• Concho Resources: (-5.1%)

Gains in utilities, real estate, and consumer staples were offset by broad losses across the remaining sectors of the S&P 500.

NOW WATCH: Here's what happens when two hurricanes collide