Investors have also been selling Treasurys this month in fear of rising inflation, pushing the yield on the 10-year U.S. Treasury note above 3 percent for the first time in four years on Tuesday morning.
The Dow Jones industrial average slipped more than 2 percent - 550 points - at its low in trading Tuesday as a key US government bond yield hit 3 percent for the first time in more than four years and in reaction to a seemingly innocuous comment from a Caterpillar executive. The Nasdaq composite dropped 121.25 points, or 1.7 percent, to 7,007.35. The Russell 2000 index declined 8.84 points, or 0.6 percent, to 1,553.28, about half as much as the S&P 500, which tracks large US companies.
Even with the 10-year note's move to the 3 percent level, interest rates remain historically low for this point in an economic expansion. That drop shaved more than 101 points from the Dow, which lost 425 points, or 1.7%, to 24,024.13.
"With bond yields popping up into the 3 percent neighborhood, they're a more compelling option today than was the case when yields were little more than half that", Benz said.
The Russell 2000 is up 26.61 points, or 1.7 percent.
Alphabet shares fell 4.77 per cent, erasing the stock's year-to-date gains as rising expenses and shrinking margins overshadowed the company's better-than-expected profit.
Stocks climbed in early trading as companies like Caterpillar, appliance maker Whirlpool, and Fifth Third Bancorp posted strong quarterly results. Defense contractor Lockheed Martin sank 5.9 percent to $337.49 and Boeing lost 2.3 percent to $330.91.
Mining company Freeport-McMoRan plunged 16 percent.
Marquez dominates for sixth-straight Texas win
It was mostly status quo for the rest of the race apart from a few fallers including championship leader Cal Crutchlow. The Suzuki man's time in the lead proved short-lived however, as Marquez got by at Turn 12 on the opening lap.
USA stocks tumbled on Tuesday as surging bond yields and disappointing outlooks from Caterpillar and 3M sent investors stampeding out of equities. "The 10-year yield was at 3 percent in 2014, and that's not ancient history".
Low interest rates have played an important role in the economic recovery of the last decade, and the yield on the 10-year note is a benchmark for many kinds of interest rates including mortgages.
Benchmark U.S. crude oil shed 1.4 percent to $67.70 a barrel in NY.
Since the global financial crisis in 2008-09, a combination of low inflation expectations and a bond-buying program by the Federal Reserve have helped keep bond yields low, but they have climbed this year as inflation expectations have picked up.
CURRENCIES: The dollar rose to 108.85 yen from 108.65 yen.
The energy group fell 0.6 per cent as oil prices declined.
Japan's Nikkei 225 fell 0.5% while the Topix index was down 0.47%. The Nasdaq increased 11 points, or 0.2 percent, to 7,139.
The largest percentage gainer on the TSX was Mitel Networks Corp, which rose 9.6 per cent. USA consumer confidence rose to 128.7 in April from 127 in March. South Korea's Kospi lost 0.7 percent at 2,445.90.