A chill swept across Wall Street Thursday, sending the major indices all down more than 1%. The Dow closed down 346 points at 30,924; the S&P 500 closed down 46 points at 3,774; while the Nasdaq lost 275 points to close at 12,723. Overall, that means the Dow is up just 1% YTD, the S&P 500 is barely in positive territory at up 0.5%, and the Nasdaq is now down 1.3% on the year.

Stocks began their slide following midday comments from Fed Chairman Jerome Powell, who was speaking at a Wall Street Journal event. “Today we’re still a long way from our goals of maximum employment and inflation averaging 2% over time,” Powell said. The Fed chief added that the recent surge in bond yields “was something that was notable and caught my attention.” 

The ‘wait and see’ message sent bond yields north and stocks south, underscoring the fact that investors anticipate more robust growth and higher inflation coming out of the pandemic. (Higher yields tend to cause investors to load up on bonds and dump stocks.)

Powell did reiterate that would take “some time” for the Fed to get to the point of considering a rate increase. Still, market watchers appear to be wary that a quickening pace of economic activity, combined with another massive stimulus package, could drive inflation above the Fed’s 2% target. This piece explains more about why that would be detrimental to equity investors.

Indeed, as Powell spoke, the yield on the 10-year Treasuries inched up, hitting 1.54%, a big move from the end of last year when it was trading below 1%. The moves in the bond market have been a subject of intense scrutiny recently. As my colleague Shawn Tully wrote in this excellent piece, rising interest rates represent the single biggest threat to the bull market right now. “The trend is toward much higher inflation than markets were anticipating even late last year. Of course, experts have been warning for years of a looming price spiral that hasn’t materialized. But that doesn’t mean it can’t happen. Prices running hot at over 3% would begin to spell danger for stocks, and anything from 4% to 5% would prove an absolute disaster. ‘History demonstrates that a high and volatile inflation regime is associated with very low price/earnings multiples,’ says Chris Brightman, chief investment officer at Research Affiliates. ‘High inflation is an unambiguous negative for stock prices.’ Fast-rising prices would force the Fed to throttle the economic engine by raising rates, a move that would hammer corporate profits.”

However, other analysts have opined in recent weeks that the market had simply become overheated and was due for a healthy pullback. “For those people who are invested, now is not the time to be concerned about a big crash,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance told Fortune‘s Anne Sraders recently.”That time will come down the road” when the Fed does raise rates to “head off” inflation. 

Still, today’s moves put the Nasdaq dangerously close to correction territory, which is defined as down more than 10% from a recent high. From its high of 14,095 the Nasdaq is now down 9.73%