Wall Street slumped as stocks fell worldwide on expectations for U.S. interest rates to stay high well into next year.

The S&P 500 lost 1.64% Thursday, its worst drop since March. Big Tech stocks tumbled again after the Federal Reserve indicated Wednesday it may cut rates next year by only half what it earlier predicted.

The Nasdaq composite fell 1.82%, and the Dow lost 370 points. The 10-year Treasury yield rose to 4.48% and is near its highest level since 2007. When bonds pay more interest, investors are less willing to pay high prices for stocks.

Stock prices tend to fall when rates rise because stocks are historically risky 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 yield is offering a yield of 4.47%, 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, was wavering following mixed reports on the economy. It slipped to 5.13% 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.

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.

The typical policy maker now sees the federal funds rate rising one more time this year, and then dropping by only half a percentage point from there through 2024. Three months ago, Fed officials were indicating 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.

High rates slow the economy and raise the pressure across the financial industry. 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 4%, while Splunk jumped 20.9%.

On the winning side of Wall Street, FedEx rose 5% after it reported stronger profit for the latest quarter than analysts expected.

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 Thursday 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.