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. More than a quarter of stocks on the Shanghai exchange fell by their 10 percent daily limit, according to Bloomberg, as the Shanghai Composite Index hit lows not seen since 2014.
All 30 Dow stocks were in the red, sending the index below 26,000 points for the first time in a month. (NASDAQ: NFLX) were among the hardest hit stocks of the past 48 hours, tumbling 7.5 percent and 9 percent, respectively.
"The speed of changes in bond yields often matters more for equities than the level", Goldman Sachs strategists said in a note.
On Thursday, President Trump renewed his criticism of the Federal Reserve, blaming the recent downturn in the stock market on the Fed's rate policy.
Canadian stocks also fell on Thursday, weighed down by a more than 2-per-cent drop in healthcare and energy stocks amid a broad based sell-off in global equities. It has climbed 27.5 percent since Donald Trump was elected, and is still up 2.1 percent in 2018. But eventually the high rates worry stock investors, as higher rates tend to increase borrowing costs and cut into profit margins.
The stock fell 35.7 percent to 38 cents in morning trading.
The Treasury held the following auctions: three-year note at 2.989%, 10-year note at 3.225%. Heating oil fell 1.2 percent to $2.39 a gallon.
Indonesia to stop searching for quake victims on Thursday: agency
But the trickle of global aid to Palu and local efforts to help the survivors have accelerated in recent days. Global volunteers said many camps lack adequate sanitation, sparking fears of the spread of disease.
USA stocks notched solid gains in the third quarter as investors brushed aside worries about trade wars and focused on strong corporate earnings and solid U.S. economic data. Technology companies and retailers, including longtime market favorites Apple, Alphabet and Amazon, continue to slide. Earnings season begins in earnest on Friday with results from JPMorgan Chase and other large banks.
The two-day 4.7-percent drop in the SPDR S&P 500 ETF (NYSE: SPY) comes after the S&P 500 gained 22.2 percent in the previous 18 months. Microsoft and Alphabet, Google's parent company, held up better than the rest of the market. It was at just 3.05% early last week and 2.82% in late August.
Benchmark U.S. crude oil fell 2.4 percent to $73.17 a barrel in NY.
The renminbi had fallen "significantly" during the year and the Treasury Department is monitoring this "very carefully" to make sure China wasn't manipulating its currency to gain an advantage in the trade war, Mnuchin told the Financial Times in an interview. USA gold futures settled up $1.9, or 0.16 percent, at $1,193.4.
The Japanese yen strengthened 0.01 per cent versus the greenback at 112.29.
"The #MAGA theme is unraveling a bit over the past few sessions as two-sided risks have been injected into the U.S. equity market", Mark McCormick, head of North American FX strategy at TD Securities, wrote in an email.