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The Dow Jones Industrial Average sank another 500 points on Thursday as a renewed rise in US bond yields and fears of higher inflation unnerve investors still piecing over a historic drop earlier this week.
The 10-year US Treasury yield rose to a high of 2.884 per cent in morning trade, nearing Monday's four-year peak of 2.885 per cent after the Bank of England said interest rates probably need to rise sooner than previously expected.
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While many investors take comfort in the possibility a setback to their nest eggs might be short-lived, the Wall Street sell-off feels shocking to others.
That added to expectations that the world's major central banks are now firmly on course to wind down the emergency stimulus they have pumped through the financial system since 2009, driving an almost decade-long stock market rally.
It sets up the Australian sharemarket for more losses. At 5:45am AEDT, futures are pointing to a drop of 77 points, or 1.3 per cent, at the open.
"Things haven’t quietened down. Things are all over the place. The market is trying to find a bottom to this madness," said Jason Ware, chief investment officer at Albion Financial Group.
"Now we are having acute attention on what happens in the bond markets, so when yields move up there is an unsettling feeling in the equity market."
The market's main gauge of volatility, the CBOE Volatility Index, fell to 29.82 on Thursday, more than twice what it was a week ago but down off a two-and-a-half year high above 50 points hit on Tuesday.
Investors are still weighing whether the sharp swings this week are the start of a deeper correction or just a temporary bump in the nine-year bull market, spurred by concerns over rising interest rates and bond yields.
By 12:24 p.m. ET (1724 GMT), the Dow Jones Industrial Average was down 499.18 points, or 2.01 per cent, at 24,394.17, the S&P 500 was down 44.5 points, or 1.65 per cent, at 2,637.16.
The Nasdaq Composite was down 129.01 points, or 1.83 per cent, at 6,922.98.
Nine of the 11 major S&P sectors were lower, with the financial, consumer discretionary and industrials leading the decliners.
Boeing was down 3 per cent and Home Depot fell 3.2 per cent, weighing the most on the Dow, while JPMorgan was among the top drags on the S&P.
Reuters