Stock market news today: Stocks tumble after weak economic data, 10-year yield falls below 4%

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US stocks were under heavy selling pressure Thursday afternoon as weak economic data and another sharp sell-off in chip stocks spurred losses across all three major indexes the day after the Federal Reserve signaled a likely rate cut in September.

The S&P 500 (^GSPC) fell almost 1.5%, while the tech-heavy Nasdaq Composite (^IXIC) erased earlier gains to drop more nearly 2.5% after closing Wednesday with hefty gains. The Dow Jones Industrial Average (^DJI) dropped almost 600 points, or 1.4%.

The 10-year Treasury (^TNX) yield moved below the 4% level for the first time since February, hovering near 3.98%.

Meta (META) stock was a bright spot, rising about 5%, after the social media giant on Wednesday afternoon reported better than expected results.

The latest ISM data out on Thursday showed the US manufacturing sector sank further into contraction territory during July. Other releases showed jobless claims rose to an 11-month high last week and construction spending unexpectedly declined in June.

The readings reflected a cooling in the US economy that revived concerns about the risk that interest rates at historic highs are driving toward a recession.

Stocks initially moved higher after Fed chair Jerome Powell bolstered the market's confidence in a September interest-rate cut, saying it "could be on the table." Traders mostly expect a 25-basis-point reduction, but bumped up bets on a 50-basis-point move after policymakers held rates steady.

The market is now counting down to Friday's release of the July jobs report, watched closely for further evidence of a slowdown that could shape Fed policy.

Meanwhile, investors are watching for quarterly results, especially from Big Tech names, after Meta's strong report late Wednesday. Shares in the Facebook owner pared an earlier climb of 8% as the market appraised its earnings beat and signs that solid digital ad revenue will give its AI investments time to pay off.

Earnings from Apple (AAPL) and Amazon (AMZN) due after the bell could test the Meta-driven bullishness for techs. They will also test the chances the AI trade can deliver on its promise, which took a hit from earlier disappointing "Magnificent Seven" earnings.

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