Stock and bond prices drop amid rising interest rates

But a recent International Monetary Fund warning on global growth taking a hit from rising tariffs has hit confidence in the stock market, as has U.S. Treasury yields at more than 7-year highs, signaling a tightening of capital globally. On Wednesday, the 10-year yield once again touched its highest level in seven years. Apple (AAPL) has declined 1.4% to $223.73, Facebook (FB) has fallen 1.8% to $155.09, Netflix (NFLX) has slumped 5.7% to $335.33, Amazon.com (AMZN) has dropped 3.2% to $1,810.09, and Alphabet (GOOGL) is off 2.1% at $1,120.08.

At 12:22 a.m. ET, the Dow was down 343.04 points, or 1.30 percent, at 26,087.53, the S&P was down 38.36 points, or 1.33 percent, at 2,841.98, and the Nasdaq was down 144.68 points, or 1.87 percent, at 7,593.34. Eastern time. It's down about 3 percent since peaking on September 20, and close to its lowest level in two months.

The S&P 500 and the Dow Jones Industrial Average fell about 1.5 percent and, at the day's low, had retreated 3.8 percent and 3.6 percent, respectively, from all-time highs.

Sears Holdings plunged on reports that the struggling retailer is preparing to file for bankruptcy.

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. There have recently been several indications that the USA housing market has cooled, likely in part due to higher rates on mortgages. Higher rates can slow economic growth, erode corporate profits and make investors less willing to pay high prices for stocks. It was at just 3.05 percent early last week.

The two-year yield soared to its highest mark since 2008.

While economists have noticed some increasing trends in the inflation data, there are few signs yet of rapid acceleration.

Many investors now believe that the Federal Reserve's campaign to "normalize" monetary policy, reversing years of extraordinary support that included the quantitative easing bond buying program and keeping its overnight target very low, will push interest rates higher than previously thought.