It's turning into an ugly day in Wall Street, with shares heading to their worst day of the year.
The deep declines comes a day after the Federal Reserve raised interest rates by half a percentage point and said more rate hike of similar size are on the table, as the central bank intensifies its fight against persistently high inflation.
The session marks a stunning reversal from the relief rally on Wednesday, when investors at first cheered that Fed Chair Jerome Powell had ruled out raising rates by more than half a percentage point at a time.
But investors are still bracing for an aggressive response from the Fed, and they worry the central bank will tip the economy into a deep recession in its quest to bring down inflation.
"I think we need to prepare ourselves for a volatile market," said Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America Securities.
Subramanian said markets were adjusting for a new environment of higher interest rates after enjoying historically low rates for years.
"I mean, for the last 30 or 40 years, we have seen rates slowly grinding down to zero, and we are embarking now on the opposite of that," she said.
The Fed's rate hikes come at a time of deep uncertainty about the global economy as Russia's invasion of Ukraine continues and China is in the midst of lockdowns to tamp down a COVID outbreak.
The Dow Jones tumbled over 1,100 points as of midday on Thursday, while the S&P 500 was down over 3% and the Nasdaq was down over 4%.
The falls come amidst an ugly year for markets.
The Fed wants to engineer a "soft landing" for the U.S. economy, by raising rates just enough to cool inflation without kickstarting a recession.
Powell believes the Fed can do that, but investors aren't so sure, and that's led to some wild swings.
Just like through the year, technology shares were among the biggest decliners on Thursday.
Netflix tumbled over 6%, while Amazon slumped over 7%.
Higher interest rates put pressure on high-growth technology stocks in particular. They are more dependent on debt, and their future earnings are worth less in a period of high inflation.
Bonds were also hit hard on Wednesday, with the yield on the 10-year Treasury trading over 3% — its highest levels since 2018.