After official data revealed that US inflation surged unexpectedly in August, Wall Street had its worst sell-off since the early days of the pandemic.
The benchmark S&P 500 stock index fell 4.3%, its worst day since June 2020, with 99.9% of its constituent companies seeing their stock values decline.
The selling pressure on technology businesses, which are thought to be the most vulnerable to rising rates, caused the Nasdaq Composite to decline by 5.2%.
The yield on short-term government debt, which measures expectations for interest rates, reached its highest point in almost 15 years.
On Tuesday, investors assumed a 1-in-3 possibility that the US central bank will increase interest rates this month by a full percentage point.
The US central bank's policymakers, who have pledged to use every tool at their disposal to rein in rising prices, are now under even more pressure as a result of the inflation data.