Technology stocks dropped on Tuesday as Janet Yellen warned that interest rates are likely to rise due to surging US Government spending.
The technology-heavy Nasdaq index sank more than 2pc in New York, driven by falls at some of the world’s biggest companies, and the broader S&P 500 headed towards its worst day since mid-March. Shares in Apple tumbled nearly 4pc, while Tesla fell 3pc.
Ms Yellen, the US Treasury Secretary, said interest rates may have to rise modestly to prevent the world’s largest economy from overheating due to high levels of government spending.
In an interview with The Atlantic, she said: “It may be that interest rates will have to rise somewhat to make sure our economy doesn’t overheat.
“It could cause some very modest increases in interest rates.”
The remarks pushed the dollar higher and sparked market jitters.
It came after a sudden sharp drop in share prices around midday UK time, causing European equities and US futures to suffer steel drops.
The FTSE 100 and other indices in Europe had opened higher, but traders were left scratching their heads when bourses tumbled 0.5pc in four minutes without any obvious cause.
Some investors speculated the sudden move was a result of tensions between China and Taiwan, Bloomberg reported.
Markets extended losses after US Treasury Secretary Janet Yellen said in an interview with The Atlantic that interest rates may have to rise modestly to prevent the world’s largest economy from overheating due to high levels of government spending.