Wall Street slid as investors locked in profits on tech stocks such as Yahoo! and LinkedIn as the latest corporate earnings season is about to start.
In afternoon trading in New York, the Dow Jones Industrial Average shed 0.88 percent, the Standard & Poor's 500 Index fell 1.23 percent, while the Nasdaq Composite Index dropped 1.80 percent.
Declines in Pfizer and Nike, down 3.1 percent and 3 percent respectively, led the Dow lower.
Shares of Yahoo! plunged 4.1 percent, LinkedIn sank 3.6 percent, Amazon shed 2.7 percent, Apple and Google each lost 1.8 percent, while Facebook dropped 1.6 percent.
Instead, investors opted for the likes of Intel, IBM and Cisco, last all up 1.5 percent.
"People decided that Nasdaq stocks, the high flyers, are too richly valued," Donald Selkin, chief market strategist at National Securities in New York, told Bloomberg News. "What's more bizarre to me is the retro tech stocks, the Mad Men-like we're back in the 1960s-are up. People are going into those old-timers, the retros, because of more reasonable valuations."
By and large the US economy has shown enough signs of ongoing momentum in its recovery in recent months that Federal Reserve policy makers have felt confident to reduce the bond-buying programme by US$30 billion to US$55 billion a month.
On Wednesday the minutes from the latest Federal Open Market Committee will be released and scrutinised by investors and economists for what lies ahead.
For now, analysts including Gary Thayer, chief macro strategist at Wells Fargo Advisors, remain cautiously upbeat.
"We remain long-term positive on the US economy and the US stock market but expect increased volatility risk this spring and summer," Thayer told Reuters.
Even so, in the current environment US Treasuries might be appealing. The US is scheduled to sell US$30 billion of three-year notes on Tuesday, followed by US$21 billion in 10-year securities on Wednesday and US$13 billion of 30-year bonds on Thursday.
Some foreign buyers "believe the economy is not in good shape and want to put money here into the bonds market," Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA, told Bloomberg News.
In Europe, the Stoxx 600 Index finished the session with a 1.2 percent slide from the previous close. The UK's FTSE 100 and France's CAC 40 both dropped 1.1 percent, while Germany's DAX sank 1.9 percent.
Here too it was tech stocks including Nokia Oyj that got hit.