01:43 PM EDT, 08/05/2024 (MT Newswires) -- US equity indexes plunged midday Monday as widespread pricing of interest-rate cuts in September and beyond fanned concern a recession is lurking.

The Nasdaq Composite fell 2.8% but was off session lows when the technology-heavy gauge was down more than 1,000 points, prompting Reuters to report that the so-called Magnificent Seven stocks were on track to shed $1 trillion in market value. Nvidia ( NVDA ) and Apple ( AAPL ) paced the steep sell-off in tech megacaps. The sector fell 3.2%, most among industry groups.

The S&P 500 sank 2.5% to 5,215.1, and the Dow Jones Industrial Average slumped 2.3% to 38,832.9. Both indexes also recovered somewhat from sharp declines seen earlier in the session.

All sectors fell intraday, with consumer discretionary posting the second-biggest drop and financials the third-largest.

The CBOE's Volatility Index (VIX), known as the fear gauge, surged 45.5% to 34.21 after an 80% jump earlier in the session.

Bitcoin plunged 6% to $54,637.04 amid a global risk-off sentiment, with Japan's Nikkei cratering more than 12% and European indexes such as the FTSE 100 in the UK, Germany's DAX and France's CAC each closing at least 1.3% lower.

"Global stock markets plummeted, with Japanese shares at one point surpassing their 1987 Black Monday decline, as concerns about a US recession drove investors away from risk," a research note from D.A. Davidson said.

According to the FedWatch Tool, the probability of a 50 basis point cut in rates stood at 86% by Monday afternoon, up from 74% a day earlier and 11% a week prior.

Updating its forecast, Goldman Sachs said the Federal Reserve will likely deliver an initial string of three consecutive 25 basis-point cuts in September, November, and December versus its prior forecast for quarterly reductions. "We increased our 12-month recession probability by 10 [percentage points] to 25%."

Last week's weaker-than-expected July employment report underscores rising concerns of a cooling labor market, a note from Stifel said. "But, while this is certainly a feather in the cap of the doves anxious to cut in September, there remains another round of employment data and five key inflation reports [August Consumer Price Index, Producer Price Index, and Personal Consumptions Expenditures Index and September CPI and PPI] between now and September 18th."

Treasury yields rose, reversing declines earlier in the session, with the 10-year up less than 1 basis point to 3.80% and the two-year rate was 5.6 basis points higher at 3.93%.

In US economic news Monday, the Institute for Supply Management's US services index rose to 51.4 in July from 48.8 in June, compared with expectations for 51 in a survey compiled by Bloomberg. However, the S&P Global US services purchasing managers' index was revised downward to 55 in July from the 56 flash reading, compared with expectations for no revision in a survey compiled by Bloomberg. The July index is below 55.3 in June. A reading above 50 signals expansion.

West Texas Intermediate crude oil fell 0.7% to $73.02 a barrel, clawing back declines of as much as 0.8% earlier in the session.

Gold dropped 0.9% to $2,446.30 an ounce, and silver slumped 4% to $27.26.