U.S. stocks opened sharply lower on Tuesday as the major indexes headed for their third straight day of steep losses.
The Dow Jones industrial average fell 250 points, pushing its three-day points losses above 2,000 points. The 30-stock index also traded about 10 percent below a record high set last month.
The S&P 500 pulled back 0.9 percent, with utilities as the worst-performing sector. The Nasdaq composite pulled back 0.7 percent after dropping more than 1 percent.
Global markets also fell sharply. The German Dax dropped 2.4 percent, while the French CAC 40 fell 2.6 percent. In Asia, the Japanese Nikkei 225 plunged 4.7 percent, while the Shanghai composite pulled back 3.4 percent.
On Monday, the Dow dropped 1,175.21 points, having briefly declined more than 1,500 points during the session. Other major indexes closed sharply lower. The sell-off kicked into action on Friday, after the latest nonfarm payrolls report saw interest rates in the U.S. jump.
This pullback comes after a rip-roaring start to the year for stocks. The Dow and S&P 500 notched all-time highs as well as sharp gains for January.
“Widespread and excessive optimism left stocks vulnerable to increased volatility as bond yields have moved off their lows,” said Bruce Bittles, chief investment strategist at Baird. “While there is some early evidence that selling pressures are becoming exhausted, and stocks could soon see relief, the broad market is seeing meaningful deterioration.”
While there was no particular piece of news that pushed major U.S. indexes deep into the red on Monday, the recent moves in the bond market have added volatility and concern to the market.
The benchmark 10-year yield traded around 2.74 percent on Tuesday; it began the year trading near 2.4 percent.
The Cboe Volatility index — widely considered the best fear gauge on Wall Street — surged 31.9 percent to 49.21. It closed at 37.32 on Monday. The surge in volatility also triggered massive selling in other volatility instruments.
—CNBC’s Patti Domm contributed to this report