Ivan Feinseth, Chief Investment Officer at Tigress Financial Partners, said that although the losses caught him off-guard, he thought many investors were unduly frightened by the rising rates.
In the 1973-74 stock market crash, for instance, the S&P 500 peaked around 700 in December 1972, and then dropped a percentage point or two nearly every month through October 1973, a 15% decline overall.
Meanwhile struggling retailer Sears was in focus as the Wall Street Journal reported that it was preparing to file for bankruptcy. The price of the bond with the lower interest rate, known as its coupon, will fall enough to raise the yield to mirror the higher rate. Nasdaq composite, which has a high concentration of technology stocks, tumbled 244 points, or 3.2 percent, to 7,495. It was at just 3.05 per cent early last week and 2.82 per cent in late August.
The increase in yields from these bonds - which are parcels of U.S. government debt - can hurt stocks since they will provide competition for investors' cash. The most recent, starting in 2007, lasted about 2 1/2 years, though it took another four for the bull market to exceed highs reached in 2007.
Tom Cahill of Ventura Wealth Management said investors were also unnerved by remarks from luxury company LVMH of a crackdown on some goods in China amid the country's bitter dispute with the United States.
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. That didn't happen Wednesday as stocks fell further late in the day.
Sears has closed hundreds of stores and sold several famous brands or put them on the block as it sees more customers abandon its stores.
The stock market was dragged down by a sell-off in tech stocks, rising interest rates and tension over trade disputes with China.
YIELDS: The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy.
U.S. crude settled down $1.79 at $73.17 per barrel and Brent fell $1.91 to settle at $83.09.
Once-highflying tech has led markets lower as yields rise, with the 10-year Treasury note's yield reaching its highest point in more than a decade yesterday.
But historically, a monthly move of one to two deviations, or 20 to 40 basis points now, would result in flat S&P 500 returns.
INFLATION WATCH: U.S. wholesale prices rose a modest 0.2 percent in September, evidence that inflation is tame.
CVS dipped 0.1% to $79.40 and Aetna added 0.5% to $204.64. Silver dipped 0.5 percent to $14.33 an ounce. Copper fell 0.9 percent to $2.78 a pound.
Investors may want to shift out of momentum and into more defensive stocks - companies that aren't as expensive and also pay healthy, stable dividends.
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.
The euro and sterling rose, underpinned by optimism for a Brexit deal, while the USA dollar lost ground against a basket of currencies even as US yields hovered near multiyear peaks.
CURRENCIES: The dollar held steady at 113.05 Japanese yen.