NEW YORK >> Wall Street fell sharply today in an ugly day for stocks worldwide on expectations that U.S. interest rates will stay high well into next year.

The S&P 500 lost 1.6% for its worst day since March. That followed a drop of 0.9% from Wednesday after the Federal Reserve indicated it may cut interest rates next year by just half of what it had earlier predicted. The Fed has already hiked its main interest rate to levels unseen since 2001, which helps slow inflation but at the cost of hurting investment prices.

High-growth stocks are typically among the hardest hit by high rates, and Big Tech stocks took the brunt of the pain for a second straight day. The Nasdaq composite dropped 1.8% as Amazon fell 4.4%, Nvidia dropped 2.9% and Telsa lost 2.6%. The Dow Jones Industrial Average dropped 370 points, or 1.1%.

Stock prices tend to fall when rates rise because stocks are riskier investments. Why stomach the chance of their big swings when Treasurys are paying more in interest than before? And they’re paying much more.

A 10-year Treasury is offering a yield of 4.48%, up from 4.40% late Wednesday and from only 0.50% three years ago. It’s near its highest level since 2007.

The two-year Treasury yield, meanwhile, wavered following some mixed reports on the economy. It slipped to 5.14% from 5.17% late Wednesday after climbing earlier in the morning.

One report showed fewer U.S. workers applied for unemployment benefits last week than expected. It was the lowest number since January and the latest signal of a remarkably resilient job market.

Such a solid labor market helps calm worries about a possible recession. But it may also give U.S. households fuel to keep spending, which could encourage companies to try to raise prices further and keep upward pressure on inflation. That in turn could give the Fed more reason to keep rates higher for longer.

A separate report, meanwhile, suggested manufacturing in the mid-Atlantic region is contracting by much more than economists expected. A third report showed sales of previously occupied U.S. homes were weaker last month than economists expected.

Manufacturing and the housing industry have felt the sting of higher interest rates in particular and have struggled more than the broad job market.

Interest rates may stay high if the Federal Reserve follows through on the latest forecasts from its policy-making officials.

Policy makers have indicated they could raise the federal funds rate one more time this year, and then cut it by only half a percentage point from there through 2024. Three months ago, Fed officials were forecasting a full percentage point of cuts could be the most likely path. They want to ensure inflation gets back down to the Fed’s target of 2%.

Wednesday’s projections may be an indication that “raises the bar for rate cuts next year,” according to Goldman Sachs economist David Mericle. He pushed out his forecast for the first cut in interest rates to the final three months of 2024, after earlier thinking it could happen during the spring.

He sees the Fed on a path where it can “simply wait until something goes wrong and then deliver either small cuts in response to a smaller growth threat, similar to the insurance cuts of 2019, or substantial cuts in response to a full recession,” he wrote in a report.

During 2019, the Fed cut interest rates amid fears that high rates could help send the economy into a recession as trade tensions flared around the world.

High rates slow the economy by design and raise the pressure across the financial world. Earlier this spring, they helped lead to three high-profile collapses of U.S. banks. They also hurt prices for all kinds of investments. The hardest hit tend to be those bid up on hopes for big growth far out in the future. That’s why tech stocks often swing in particular with expectations for rates.

Cisco Systems also took a hit after it said it would buy Splunk, a cybersecurity company, for roughly $28 billion in cash. Cisco fell 3.9%, while Splunk jumped 20.8%.

On the winning side of Wall Street, FedEx rose 4.5% after it reported stronger profit for the latest quarter than analysts expected.

All told, the S&P 500 fell 72.20 points to 4,330.00 and is back to where it was in June. The Dow dropped 370.46 to 34,070.42, and the Nasdaq lost 245.14 to 13,223.98.

London’s FTSE 100 slipped 0.7% after the Bank of England left interest rates steady. The expectation had been for another rate hike, but a surprising report this week showed a drop in U.K. inflation.

Stock markets elsewhere around the world were much weaker.

Japan’s Nikkei 225 fell 1.4%, South Korea’s Kospi dropped 1.7% and France’s CAC 40 lost 1.6%.

New Zealand’s benchmark index held steadier after figures released today by Statistics New Zealand indicated the economy expanded at a 3.2% annual pace in the April-June quarter. Finance Minister Grant Robertson said the economy was turning a corner and growing at twice the rate predicted by economists.

AP Business Writers Matt Ott and Elaine Kurtenbach and AP Writer Nick Perry contributed.