U.S. stocks dropped sharply Wednesday, as a selloff in technology stocks led the major indices to lows not seen since this spring. 

The Dow Jones industrial average had its second-biggest drop of the year, plunging nearly 500 points, or 1.9 percent, shortly after 2:00 p.m. Eastern time. It's on pace to be the index's worst day since Feb. 5, when it lost over 1,100 points in a single trading day.

The S&P 500 was down 55 points, or 1.9 percent, at 2,824—on pace for its worst day since June. The Nasdaq composite dropped 173, or 2.2 percent, to 7,565.

Tech stocks in the S&P 500 fell 2.7 percent Wednesday for the steepest loss among the 11 sectors that make up the index. Companies that sell non-essentials to consumers dropped 1.7 percent. These sectors had been some of the top performers over the last year, nearly doubling the performance of the S&P 500.

Stock prices have been hurt by rising interest rates, which have boosted Treasury yields over the last week. On Wednesday, the 10-year yield once again touched its highest level in seven years.

Earlier on Wednesday, Sears Holdings plunged on reports that the struggling retailer is preparing to file for bankruptcy. The stock fell 35.7 percent to 38 cents in morning trading. It was more than $40 five years ago. Over the years, Sears has closed hundreds of stores and sold several famous brands.

The biggest driver for the market over the last week has been interest rates, which began spurting higher following several encouraging reports on the economy. Higher rates can slow economic growth, erode corporate profits and make investors less willing to pay high prices for stocks.

The 10-year Treasury yield rose to 3.22 percent from 3.20 percent late Tuesday after earlier touching 3.24 percent. It was at just 3.05 percent early last week. The two-year yield rose to 2.88 percent from 2.87 percent, and the 30-year yield climbed to 3.38 percent from 3.37 percent.

While economists have noticed some increasing trends in the inflation data, there are few signs yet of rapid acceleration. That's good news for markets: If inflation were to spike, it would push the Federal Reserve to get more aggressive in raising interest rates.

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