West Texas Intermediate has shed almost $4 a barrel since Tuesday, marking its steepest two-day decline in more than three years.
At the closing bell, the Dow Jones Industrial Average had lost 3.1% or 830 points to finish at 25,613.35, in the biggest fall since February.
All of those factors could threaten the impressive profits Corporate America has been reporting this year. Every one of the 11 S&P 500 sectors finished down for the day.
Meanwhile, the technology-heavy Nasdaq index dropped by 1.3pc to 7,329.
Losses were fairly broad-based, with tech companies Amazon and Microsoft plummeting more than three percent, along with Boeing, Nike and Caterpillar.
USA consumer prices rose less than analysts had forecast in September, reducing expectations the pace of inflation is accelerating despite a tightening labor market. Some early relief over a tame report on inflation gave way to renewed selling.
The small-cap Russell 2000 index, which is less sensitive than its larger peers to global worries such as trade and yields, was down 1.18 percent.
Bond yields, which have spiked over the last week, slid after the Labor Department said consumer prices rose less than economists expected in September.
Tech stocks, hit hard Wednesday, crept back into positive territory Thursday morning. Earnings season should improve investors' moods through the end of the year, he writes, with a cycle peak in 2020 and the next major low not due until 2020. Chip gear producers Applied Materials, Teradyne and ASML Holdings fell between 3.5 percent and 4.6 percent.
The S&P 500 lost 94 points, or 3.3 per cent, to 2,785.
The Dow Jones Industrial Average fell 198.28 points, or 0.77 per cent, to 25,400.46. The Nasdaq composite rose 15 points, or 0.2 percent, to 7,436.
Although that's largely because the USA economy is so strong, the spike in rates for the benchmark U.S. 10-Year Treasury has investors wondering if the near-decade-old bull market may finally be ending.
Investors may want to shift out of momentum and into more defensive stocks - companies that aren't as expensive and also pay healthy, stable dividends. Think of it this way, if the Treasury issues a $1000 bond paying 3 percent interest, investors will not pay $1000 for an older bond paying 2 percent interest. "Even the economic impact felt locally will give way to faster economic growth in future months as insurance proceeds arrive and clean-up and rebuilding activity gets underway".
The S&P 500 index sank 94.66 points, or 3.3 percent, to 2,785.68.