Bolstering the Fed's view of a solid economy, ADP published a report on Wednesday showing 234,000 private sector jobs added in January compared with 185,000 expected by analysts. The amount outpaced expectations of 185,000 jobs.
The tech-heavy Nasdaq shed 64 points or 0.86% to 7,402.48.
The Dow tumbled 363 points on Tuesday. The index fell as much as 352 points, its steepest intraday point drop since May 17. It is still up 5.57 percent on the year.
The Nasdaq is up 508.09 points, or 7.4 percent. However, health-care stocks remained under pressure. That being said, Massocca does not anticipate a continued decline.
"It's just profit-taking", said Jeffrey Schulze, an investment strategist at ClearBridge Investments.
The sell-off, volatility and rising bond yields mark a turn for USA markets that have been making gains for months, .
Another positive for Wall Street: the bond market has stopped tanking, at least for the moment.
"It's not any, one single head wind", said Steven Hill, equity portfolio manager Foresters Financial.
Bond yields creeping higher over the past few weeks has unnerved investors, raising concern that the era of extremely low interest rates may soon be over. Chipmaker Advanced Micro Devices added 74 cents, or 5.7 percent, to $13.61.
On Monday, the USA 10-year treasury yield hit 2.73%, the highest level since April 2014.
Markets in the USA recovered from yesterday's losses, finishing slightly higher. They prevent stocks from overheating and give investors stuck on the sideline an opportunity to get in. This week yields have hovered at the highest level since April 2014.
Higher inflation could also lead central banks to tighten monetary policy faster than the market expects.
Shares of utilities and real-estate companies, considered by many investors to be bondlike due to their relatively hefty dividends, were among the biggest decliners in the S&P 500, falling alongside U.S. Treasury prices. On Tuesday, the sector fell 2.1 percent. Over in Sydney, the S&P/ASX 200 gained 0.71%.
Late Tuesday, President Trump will deliver his first State of the Union address. That created a certain degree of irony given that the president has been boasting about the market's 8,000 point climb since his election in November 2016.
The bond market is unnerving stock investors.
"In 2017, the USA market was up over 22 percent, as measured by the S&P 500 index without experiencing a single month when the market declined - the first time this has happened since 1958", Norman said in a one-page paper.
"There is some nervousness ahead of the Fed statement", said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird. "However, trend is more "frenemy" than friend and can change course quickly".