US equity indexes sank and government bond yields slumped with the dollar after midday on Monday amid mounting concern that the economy could be heading for a recession.

The Nasdaq Composite plunged 3.7% to 17,523.5, the S&P 500 slumped 2.3% to 5,638.5, and the Dow Jones Industrial Average was 1.2% lower at 42,275.1. The S&P 500 and the Nasdaq fell to the lowest since mid-September levels.

Communication Services, Technology, and Consumer Discretionary sectors led the declines, while Energy and Utilities were the top gainers intraday. The so-called Magnificent-7 group of stocks such as Tesla (TSLA), Meta Platforms (META), Apple (APPL), and Nvidia (NVDA) were among the worst-performing 20 mega-caps -- companies with a market capitalization of more than $200 billion -- intraday.

President Donald Trump failed to rule out the US economy could be entering a recession in 2025 while telling Fox News over the weekend that "there will be a "period of transition because what we're doing is very big."

Tariffs unsettled markets last week after Trump imposed a 25% levy on Mexico and Canada, sparking concern prices would increase in response to punitive import duties. His administration later delayed some of the tariffs by a month, clouding the outlook for supply costs. Additional 10% import duties on China remained unchanged. The three countries are the US' largest trading partners.

In economic news Monday, median inflation expectations increased by 0.1 percentage point at the one-year horizon to 3.1% in February, according to the Federal Reserve Bank of New York. They were unchanged at the three-year and five-year horizons -- both at 3% -- in February. "If the economy remains strong but inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer," Federal Reserve Chair Jerome Powell said Friday following the nonfarm payrolls data that showed the unemployment rate ticked up and jobs grew less than forecast.

The CBOE's volatility index VIX, known as the fear gauge, soared 14% to 26.67 intraday.

US Treasury yields dropped, with the 10-year diving 8.8 basis points to 4.23% and the two-year rate traded 7.3 basis points lower to 3.93%.

The US dollar depreciated 0.5% against the Japanese yen to 147.26.