US stocks plunge as Treasury yields top 1.6 percent

US stocks plunged on Thursday. The S&P 500 tumbled 2.5 percent and the Nasdaq sank 3.5 percent.

US stocks fell after the 10-year Treasury yield briefly topped the 1.6 percent level on Thursday and traded at its highest level in more than a year.

Yields moved higher in afternoon trading following an auction of 7-year Treasury bonds where dealers were stuck with a much higher percentage of the bonds than the 12-month average.

“Could there be more inflation coming than what most think? Although the Fed isn’t worried about that, the market might be,” said Ryan Detrick, chief market strategist for LPL Financial.

“The Nasdaq will continue to lead the slide lower,” said Edward Moya, senior market analyst at OANDA.

Strategist Albert Edwards of Societe Generale said that “the risk is growing that with so many bubbles blown by the Fed something will burst soon”.