US stocks plunge into bear market as S&P 500 and Dow Jones sink

The Dow Jones was down more than 875 points, or 2.8%, and the tech-heavy Nasdaq composite crumpled 4.7% as investors continued to sour on once high-flying tech stocks.

No one thinks the Fed will stop there, with markets bracing for a continued series of bigger-than-usual hikes. Those would come on top of some already discouraging signals about the economy and corporate profits, including a record-low preliminary reading on consumer sentiment that was soured by high gasoline prices.

Such expectations are also sending US bond yields to their highest levels in years. The two-year Treasury yield shot to 3.23% from 3.06% late Friday, its second straight major move higher. It has more than quadrupled this year and touched its highest level since 2008.

The 10-year yield jumped to 3.32% from 3.15%, and the higher level will make mortgages and many other kinds of loans for households and for businesses more expensive. It has more than doubled this year.

The gap between the two-year and 10-year yields is also narrowing, a signal of increased pessimism about the economy in the bond market. If the two-year yield tops the 10-year yield, some investors see it as a sign of a looming recession.

The pain for markets was worldwide as investors braced for more aggressive moves from a coterie of central banks.

In Asia, indexes fell at least 3% in Seoul, Tokyo and Hong Kong. Stocks there were also hurt by worries about Covid infections in China, which could push authorities to resume tough, business-slowing restrictions.

Associated Press contributed to this story.