"Equity investors are surprised by the pace at which rates have risen", Marcella Chow, global market strategist at J.P. Morgan Asset Management, said in a report. The Dow and other major US stock indexes fell more than 3%. All 30 of the Dow's stocks were in the red and it fell below 26,000 total points for the first time in a month, CNN reported.
Stocks fell Wednesday as Wall Street sweats over global growth prospects and a bond selloff.
Shares in Facebook, Amazon, Apple, Netflix and Google's parent company Alphabet - the so-called "FAANG" stocks that have driven United States markets to all-time highs recently - all fell in NY trading.
Rising government bond yields have made them more attractive, leading investors to pull money out of equities. On Wednesday he said he thought policy makers were "making a mistake" and said the Fed had "gone crazy".
Canadian stocks also fell on Thursday, weighed down by a more than 2-per-cent drop in healthcare and energy stocks amid a broad based sell-off in global equities. Higher rates increase borrowing costs, pinching corporate profits.
Wednesday marked the largest single-day decline in the Dow Jones since February 8, when it fell 1,032 points to close at 23,860.
This time around, strong economic data anxious bond investors, who sent the benchmark yield on Tuesday to 3.261 percent, the highest since early May 2011.
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The Treasury held the following auctions: three-year note at 2.989%, 10-year note at 3.225%. Amazon dropped another 2% to $1,719.36 and Apple fell 0.9% to $214.45.
Trade-sensitive industrial stocks also fell as tensions between Washington and Beijing persisted.
Technology and retail companies continued to stumble. JPMorgan Chase and several other banks will report their third-quarter results Friday morning. France's CAC 40 and the British FTSE 100 both dropped 1.9 percent and the DAX in Germany lost 1.5 percent. Facebook, the sixth-largest company, has tumbled 29 percent since late July, surpassing the 20-percent threshold for a "bear market". Microsoft and Alphabet, Google's parent company, held up better than the rest of the market.
"As uncertainty continues to prevail in financial markets across the world, many investors are staying on the sidelines until more clarity emerges in U.S. Treasury and Chinese markets", said Yasuo Sakuma, chief investment officer at Libra Investments, according to Reuters.
Benchmark U.S. crude oil fell 2.4 percent to $73.17 a barrel in NY. After years of big gains, those stocks are now out of favor.
Wholesale gasoline shed 2.7 per cent to $2.02 a gallon.
After months of declines, the price of gold jumped by the most in two years, rising 2.9 percent to $1,227.60 an ounce. U.S. gold futures settled up $1.9, or 0.16 percent, at $1,193.4.
The dollar fell to 112.59 Japanese yen from 113.05 yen late Tuesday.