At the closing bell in the New York Stock Exchange on Wednesday, the Dow Jones Industrial Average had lost 3.1 percent or 830 points to finish at 25,613.35, in the biggest fall in eight months.
Stock prices have been hurt by rising interest rates, which have boosted Treasury yields over the last week.
"It's primarily the cumulative effect of interest rate moves over the past five days and news reports about trade impacting companies", he said. Amazon lost 6.2% and Netflix gave back 8.4%. The tech-heavy Nasdaq Composite was down by 2.4 percent.
"The market is digesting the potential that rates moving upwards eventually seep into the real economy in the form of mortgage rates, auto rates, student lending rates", Mahajan said.
US stock indexes fell in early trading Wednesday as interest rates nudged higher yet. It was at just 3.05% early last week and 2.82% in late August.
Oil prices fell more than two percent as US stocks plunged, even though energy traders anxious about shrinking supply from Iran due to US sanctions and kept an eye on Hurricane Michael, which closed almost 40 percent of US Gulf of Mexico output.
Earnings were a major driver of the market last quarter, and analysts see more robust results ahead, even if companies face growing issues like the yet-to-be-resolved trade war and higher raw-materials costs. It was at just 3.05% early last week.
Luxury retailers tumbled. Tiffany plunged 9.5 percent to $111.28 and Ralph Lauren fell 7.3 percent to $118.42. Brent crude, the global standard, lost 2.2 per cent to US$83.09 a barrel in London.
Wholesale gasoline shed 2.7 percent to $2.02 a gallon.
CVS dipped 0.1 percent to $79.40 and Aetna added 0.5 percent to $204.64. Natural gas rose 0.6 percent to $3.28 per 1,000 cubic feet. A move of more than two deviations, or 40 basis points now, leads to negative S&P 500 returns, Goldman says.
Gold was flat at $1,191.50 per ounce.
The CBOE Volatility Index, Wall Street's "fear gauge", rose 2.5 points, gaining for the fifth straight session to hit its highest since June 25.
The CAC 40 in France dropped 1.5 percent, Germany's DAX lost 1.2 percent and the FTSE 100 in London slipped 0.4 percent. Citing concerns about trade and emerging markets, the worldwide lender lowered its global growth forecast for this year and next in a report. Investors see many of these countries as being vulnerable to higher USA interest rates, which can pull away investment dollars. Brazil's Bovespa lost 2.5 per cent and the Merval in Argentina sank 2.2 per cent.
The dollar fell to 112.59 Japanese yen from 113.05 yen late Tuesday. The euro rose to $1.511 from $1.1496 late Tuesday, and the British pound rose to $1.3175 from $1.3146.
In London, the FTSE 100 was down by 1% as hopes of a Brexit deal lifted the pound - weakening the sterling value of earnings for numerous global index's multinational constituents.