The Nasdaq composite, which has a high concentration of technology companies, had its biggest loss in more than two years.
"If the Feds are insane, this market reaction is bordering on insanity, as so many negative crosscurrents collide that is merely impossible to find a glint of optimism", he added. That was its worst drop in eight months.
The S&P, Dow Jones and Nasdaq plunged between 3 and 4 percent. The benchmark index fell for the fifth straight day, which hadn't happened since just before the 2016 presidential election.
Shares in upscale jewellery retailer Tiffany & Co and perfume maker Estee Lauder both fell 7 percent after a warning from French luxury goods firm LVMH about softening demand in China.
The S&P 500 lost 94 points, or 3.3 per cent, to 2,785. XRP and Tron, which had an overall bullish September, too fell drastically - by over 10 percent each, indicating the previous upsides were only hype-centered.
The spread of red ink overseas, though, suggested more turbulence ahead for Wall Street, where a growing list of concerns is sowing unrest for a market that has been on a historic run on the back of strong earnings.
That's helped make technology stocks more volatile in the last few months. The Dow Jones fell by more than 500 points, a drop of nearly 2pc, while the wider S&P 500 index fell for a fifth day straight, its worst run in nearly two years.
Alibaba dropped 4.1 percent after Morgan Stanley and Raymond James cut their near-term profit estimates on the Chinese e-commerce company, citing a softer economic environment in China.
The stock market as a whole, however, had solid reasons behind the fall: rising interest rates.
Facebook fell 4.1 percent while Netflix and Google parent Alphabet were down 8.4 percent and 5.1 percent, respectively. The Russell 2000 index of smaller-company stocks shed 37 points, or 2.3 per cent, to 1,584. Berkshire Hathaway dipped 4.7 per cent to US$213.10 and reinsurer Everest Re slid 5.1 per cent to US$217.73.
Locally, ASX futures are trading significantly lower, down 97 points (1.6 per cent), which means the heavy selling in foreign markets will extend to the Australian share market when it opens today.
"If investors are going to take profits then it will be from some of the bigger, high-growth names", Nauman said.
The 10-year Treasury note yield traded around 3.23 percent, while the two-year yield reached its highest mark since 2008.
The moves come as positive economic data - including the unemployment rate standing at 3.7 percent, its lowest level since 1969 - stoked investor fears that the Federal Reserve would raise rates aggressively to prevent the economy from overheating.
Technology and internet-based companies are known for their high profit margins, and many have reported explosive growth in recent years, with corresponding gains in their stock prices.
After a long stretch of relative calm, the stock market has suffered sharp losses over the last week.
A bear market by many definitions requires a drop of at least 20% in the S&P 500 from a bull-market peak; likewise, a bear market starts counting at a 20% rise out of a deep trough.
Earlier on Wednesday, Sears Holdings plunged on reports that the struggling retailer is preparing to file for bankruptcy. In 1987, stocks dropped more than 20 percent on a single day-Black Monday, Oct. 19-after a strong rally crashed into the Persian Gulf turmoil and trade deficits.
All three indexes hit records between August 30 and October 3, despite the escalating Sino-US trade dispute gnawing at confidence on corporate profit growth through most of the year. Over the years, Sears has closed hundreds of stores and sold several famous brands.
USA crude settled down $1.79 at $73.17 per barrel and Brent fell $1.91 to settle at $83.09.