The Dow Jones average fell more than 2 percent – 550 points – in afternoon trading when a major US Treasury yield hit 3 percent for the first time in more than four years, and in response to a seemingly innocent comment by Caterpillar  Traders feared that rising yields on long-term government bonds could mean higher interest rates for consumers and corporates and a period of declining equity prices.
Standard & Poor's 500 stock index and The Heavy Nasdaq Composite also suffered heavy losses – both down more than 1.6 percent.
The price of oil, which has reached highs since the end of 201
There was a broad sellout across sectors 3M, Caterpillar, DowDuPont and Travelers top the losers in the Dow. But companies as diverse as Apple, Coca-Cola and Goldman Sachs fell.
3M, the maker of Tesafilm and Post-its, suffered the hardest after the company wanted to lower its earnings forecast for 2018. The lead multinational fell more than 8 percent, and other industrial groups followed suit. Scott Clemons, chief investment officer at Brown Brothers Harriman, said the sell-off in industrials was the result of a short delay in Caterpillar CFO Brad Halverson's earnings payoff, saying that first-quarter earnings were "the high-water mark for the Year, "due to increased investment in 2018.
" The remark that the first quarter was a high-water mark for The company scared both the industry and the overall market, "said Clemons. "Today is just a curling effect."
Stock prices are at historically high levels and investors are reacting sensitively to any sign that corporate earnings may decline.
The S & P 500 Index and the Nasdaq Composite were also negative on Tuesday afternoon. each index also drops about 2 percent.
The 10-year Treasury is a proxy for interest rates and a predictor of the long-term prospects for the US economy. The return on the 10-year-old is one of the most widely respected financial measures in the world; Mortgages and corporate loans are closely tied to the government bond.
Investors tend to make bonds safer than equities when the 10-year yield reaches 3 percent or more.
Christine Benz, Head of Private Finance at Morningstar, said rising yields make borrowing more attractive.  "With bond yields moving into the 3 percent neighborhood, they are now a more compelling option than they were when yields were just over half," said Benz.
The Dow's industrials were hit hardest by 3M and Caterpillar, which fell more than 6.5 percent down Travelers Companies, which reported a disappointing first quarter, slipped 4 percent.
The only plus S & P 500 sectors were Utilities, Telecom and Real Estate. Industry, information technology and consumer staples were the laggards.
There are tens of thousands of dollars in 10-year Treasuries on the planet every day, with banks, mutual funds, and foreigners among the largest owners. The bonds are traded on the secondary market. Yields respond to supply and demand, with yields rising as prices fall and yields drop as 10-year-olds become more expensive.
Wall Street believes that the upward or downward movement of its earnings is a crystal ball that predicts inflation. Recession, bull markets, bear markets, real estate prices and corporate profits.
"Investors are worried about rising interest rates and the risks of overheating the economy," said Torsten Slok, international chief economist at Deutsche Bank. "People sell stocks and chew on what to do next."
The yield level itself does not signal a recession. Crucial is the difference between the two-year yield and the 10-year yield. At the moment, the difference between them is about half a percentage point. The risk of a recession increases as the difference is closer to zero.
Clemons said he was not worried about a recession, as the underlying housing and labor market data support a healthy economy. He seemed to believe that the markets overreacted to the 3 percent threshold of the 10-year yield.
"I do not understand the concern over the 3 percent return," Clemons said. "The 10-year return was 3 percent in 2014, and that's not an old story: the S & P has risen 55 percent since the beginning of 2014."