US stocks plummeted, the greenback jumped and the Treasury yield inversion hit its steepest mark in more than four decades on Tuesday as Federal Reserve Chairman Jerome Powell concluded the first day of his semi-annual, two-day monetary policy testimony before Congress.

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The Dow Jones fell nearly 600 points to turn negative for the year, while the S&P 500 lost 1.5 percent. The Nasdaq declined 1.2 percent with the two-year treasury yield jumping to its highest since 2007 at 5 percent. The S&P 500 and Nasdaq are still up 3.8 percent and 10.2 percent respectively.

The dollar jumped, and the inversion between short- and long-dated Treasury yields eased and crude prices tanked as the testimony from the US central bank chief reaffirmed the Fed's determination to bring inflation down to its 2 percent target rate.

"It's a pretty classic risk-off day," said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. "The combination of (Powell) saying that the pace of rate hikes could accelerate and that the terminal rate would probably have to be adjusted upward was enough to send risk assets tumbling."

In his testimony, Powell confirmed that a recent spate of generally robust economic data, particularly in the labor market, along with stubbornly slow inflationary cool-down, increases the likelihood that the Fed will raise its policy rate more aggressively.

At last glance, financial markets have priced in a 70.5 percent chance of a 50 basis point increase to the federal funds target rate at the conclusion of the central bank's March meeting, according to CME's FedWatch tool.

European shares extended their losses after Powell's prepared remarks fueled rate hike worries.

"The world is concerned that the Fed hikes rates so much and so long that the U.S. could head into recession," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York.

The pan-European STOXX 600 index lost 0.77 percent and MSCI's gauge of stocks across the globe shed 1.46 percent.

Emerging market stocks lost 0.87 percent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.81 percent lower, while Japan's Nikkei rose 0.25 percent.

Benchmark Treasury yields dipped after Powell's remarks, and the inversion between 2-year and 10-year Treasury yields, a harbinger of potential recession, steepened. It was last wider in 1981.

Benchmark 10-year notes last rose 4/32 in price to yield 3.9696 percent, from 3.983 percent late on Monday.

The 30-year bond last rose 18/32 in price to yield 3.8794 percent, from 3.912 percent late on Monday.

The greenback surged, hitting its highest level since early January against a basket of world currencies as Powell indicated the Fed could ramp up its efforts to rein in inflation.

The dollar index rose 1.21 percent, with the euro down 1.22 percent to $1.0548.

The Japanese yen weakened 0.88 percent versus the greenback at 137.16 per dollar, while sterling was last trading at $1.1825, down 1.63 percent on the day.

Oil prices extended their losses, falling more than 3 percent on the strengthening dollar and worries over dampening demand.

U.S. crude fell 3.58 percent to settle at $77.58 per barrel and Brent settled at $83.29, down 3.35 percent on the day.

Gold plunged in opposition to the rising dollar. Spot gold dropped 1.8 percent to $1,814.48 an ounce.