The Dow Jones Industrial Average has plunged by 1,175 points, its biggest single-day drop in history.
When last Friday's results are included, the blue-chip index has plunged by more than 1,800 points in two days — erasing all its 2018 gains.
The US market wipe-out was sparked by a fast rise in interest rates, with US 10-year bond yields reaching a four-year high.
The sell-off extended to the broader S&P 500 which fell by 113 points (or 4.1 per cent) to 2.649.
As for the tech-heavy Nasdaq, it fell 3.8 per cent to 6,968.
Every S&P sector was smashed, with financials (-4.7pc), healthcare (-4.6pc), industrials (-4.5pc) and energy (-4.3pc) being the worst performers.
The sectors with the least losses were utilities and consumer cyclicals, which dropped 1.7 and 3.3 per cent respectively.
Energy stocks like Exxon Mobil tumbled after oil prices fell sharply overnight — with Brent crude down to $US67.50 a barrel
The big banks Citigroup, Goldman Sachs and Bank of America have dropped by up to 2.5 per cent each.
But it was Wells Fargo which fell the hardest — falling by 9.2 per cent, making it the weakest of the 500 stocks in the S&P index.
This was after the Federal Reserve forced Wells Fargo to replace four directors. In addition, the Fed is restricting the bank from getting any larger or richer until its "widespread consumer abuses" are addressed.
Australian market to fall
With ASX futures down by 45 points, the Australian market is expected to fall.
Today is also a big day for local economic news.
The Reserve Bank board will meet today, and most likely keep interest rates on hold at the record low 1.5 per cent.
Also, the Bureau of Statistics will release its latest retail and international trade figures.
The Australian dollar is continuing to feel some pressure, and has fallen to 78.8 US cents.
However, the local currency held its ground at 56.4 British pence and 63.7 Euro cents.
More to come.