NEW YORK, U.S. - As companies grapple with slowing demand, investors have grown increasingly worried about growth in the technology sector.
On Wednesday, the benchmark S&P500 stock index recorded its biggest one-day fall since February, dropping over 3 percent.
With the benchmark index dropping and concerns rising over the increasing U.S. interest rates, stocks on major world markets plunged to a new three-month low.
Technology shares also dragged major equity indexes in Europe lower, which fell over 1 percent on Wednesday.
Gold prices, on the other hand, inched up as some investors sought refuge in the metal.
Austrian chipmaker AMS recorded the worst performance in Europe's tech sector, dropping 5.9 percent.
Further, STMicroelectronics too performed badly, closing down 5.8 percent.
After the Swiss company VAT Group said that demand from chip equipment makers was softening, the Philadelphia Semiconductor index tumbled 4.46 percent.
The S&P500 lost 94.66 points, or 3.29 percent, to 2,785.68.
The Dow Jones Industrial Average fell 831.83 points, or 2.2 percent, to 25,598.74.
The Nasdaq Composite dropped 315.97 points, or 4.08 percent, to 7,422.05.
MSCI's gauge of stocks across the globe recorded its biggest single-day fall since February.
The FTSEurofirst 300 index of leading European shares closed down 1.57 percent.
With leaders expression optimism for a Brexit deal, the euro and sterling rose.
The U.S. dollar lost ground against a basket of currencies.
The euro rose 0.25 percent to $1.1518.
The dollar index fell 0.17 percent.
Yen strengthened 0.53 percent versus the greenback at 112.36.
Meanwhile, Bond yields, that recorded multi-year highs earlier this week, ended lower on Wednesday.
Yields were pushed down to 3.1931 percent, after benchmark U.S. 10-year Treasury notes rose late in the day.
The positive U.S. economic data has bolstered U.S. Treasury yields, that has led to expectations of the Federal Reserve announcing multiple rate hikes over the next 12 months.
According to Michael Matousek, head trader at U.S. Global Investors said, "The S&P 500 is looking very weak and negative and that is putting fear into investors. With the markets going down people are increasing their allocation towards gold."
Meanwhile, the drop in U.S. stocks, the possible impact from Hurricane Michael in the U.S. and worries amongst traders over the impact of U.S. sanctions on Iran's oil supply caused oil prices to drop over 2 percent.
U.S. crude settled down $1.79 at $73.17 per barrel.
Brent fell $1.91 to settle at $83.09.