12:13 PM EDT, 08/05/2024 (MT Newswires) -- US equity indexes plunged midday Monday and government bond yields extended declines after markets began to price in an extreme scenario of a 100 basis-point cut in interest rates in September, boosting volatility and fanning concern a recession is lurking.

The Nasdaq Composite fell more than 1,000 points intraday before trading 2.6% lower with Reuters reporting the so-called Magnificent Seven are on course to shed $900 million of 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 2.4% to 5,220.3, and the Dow Jones Industrial Average slumped 2.1% to 38,885.4.

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 46% to 34.29 after an 80% jump earlier in the session.

Bitcoin plunged 8% to $54,352 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 100 basis-point cut in interest rates in September stood at almost 11% versus no such expectations for such a drastic move a day and a month ago. The likelihood of a 50 basis point reduction was just under 90%, up from 74% a day earlier and 11% a week prior.

Treasury yields extended declines from last week, with the 10-year down 3.7 basis points to 3.76% and the two-year rate retreating 3.2 basis points to 3.84%.

West Texas Intermediate crude oil fell 0.8% to $72.95 a barrel.