"The stock market in the US has started to take notice, and will continue to, particularly if the speed at which rates rise becomes alarming", Jeffrey Gundlach, chief executive of Doubleline Capital, told Reuters last week. The index fell by more than 3%.
The 2-year yield hit its highest level since 2008. Brent crude, the worldwide standard, lost 2.2 per cent to US$83.09 a barrel in London.
The S&P was down almost 4 percent in less than five sessions as of Wednesday afternoon.
Big moves in interest rates tend to unsettle investors, and they can also push them to sell stocks and buy bonds instead.
The Dow Jones Industrial Average gave up 831.83 points, or 3.1 percent, to 25,598.74.
The market had enjoyed a stretch of relative calm, where even big intraday losses were erased by the end of the day.
Among the tech sector's worst performers in Europe, Austrian chipmaker AMS fell 5.9 percent and STMicroelectronics closed down 5.8 percent.
It was the fifth negative day for the S&P 500, and the longest losing streak during the Trump presidency.
Technology shares tumbled on fears of slowing demand, while bond yields ended lower after seeing multi-year highs earlier this week.
South Korea's Kospi dropped 1.1 per cent, the CAC 40 in France dropped 2.1 per cent, Germany's DAX lost 2.2 per cent and the FTSE 100 in London fell 1.3 per cent.
USA gold futures settled up $1.9, or 0.16 percent, at $1,193.4. Copper fell 0.9 per cent to $2.78 a pound.
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USA stocks slipped Wednesday, putting the S&P 500 on course for a fifth consecutive session of declines as government-bond yields kept rising.
Although the losses were widespread, stocks that have been the biggest winners on the market, including technology companies and retailers, suffered steep declines. Microsoft gave up 3.3 percent.
The 10-year Treasury yield remained at 3.20 percent, about where it was late Tuesday, after earlier touching 3.24 percent.
Sears Holdings plunged 37 percent after the Wall Street Journal reported that the struggling retailer is preparing a bankruptcy filing. The Dow Jones Industrial Average fell 700 points in afternoon trading. The Nasdaq composite fell 152 points, or 2 percent, to 7,585.
US stocks plunged to their worst loss in eight months on Wednesday as technology companies continued to drop.
Earlier on Thursday, the SPI200 futures contract was down 109 points, or 1.81 per cent, to 5,914.0 at 7am AEDT, pointing to bleak open for the ASX, which had clawed back some ground on Wednesday after a turnaround in financial stocks and a strong performance by the healthcare sector.
All 30 Dow stocks were in the red, sending the index below 26,000 points for the first time in a month.
Oil firms Hess Corp and Marathon Oil fell around 7 per cent as Chevron dropped 3 per cent ahead of the third-quarter earnings season.
Bond prices fell. The yield on the 10-year Treasury rose to 3.23 percent.
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