The stock market took its worst battering since the height of the pandemic in June 2020 as investors worry that the Federal Reserve’s tightening could plunge the country into a recession.

The tech-heavy Nasdaq plummeted by about 5% on Thursday, and the Dow Jones Industrial Average lost more than 1,120 points, or 3.12%, with both indices suffering their biggest declines since early in the COVID-19 pandemic. The S&P 500 was down more than 3.5%.

In tandem with equities crashing, the 10-year Treasury yield hit its highest level since 2018, surging back above 3%.

The negative market moves came a day after the Fed announced it was conducting a half percentage point rate hike, an aggressive move it hasn’t taken in more than two decades.

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Because investors had already priced in the change in rates and Fed Chairman Jerome Powell on Wednesday pushed back on the notion of even bigger hikes, stocks initially rallied Wednesday, with the Dow gaining 923 points, or 2.81%, the Nasdaq moving up 3.2%, and the S&P 500 jumping by nearly 3%.

Both the S&P 500 and the Dow had their best days since 2020 on Wednesday, making Thursday’s plunge even more dramatic.

“If you go up 3% and then you give up half a percent the next day, that’s pretty normal stuff. ... But having the kind of day we had yesterday and then seeing it 100% reversed within half a day is just truly extraordinary,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research, in comments made to NBC.

The markets appear to be spooked about the prospect of the Fed being too far behind the curve on bringing down inflation. Consumer prices are increasing at the quickest pace since the Great Inflation of the 1980s, and some investors fear the central bank’s tightening will cause the economy to slow too quickly and bring about a recession.

The Chicago Board Options Exchange Volatility Index, better known as the VIX, is intended to gauge fear in the markets. The index was up more than 22.74% on Thursday, an enormous jump that illustrates the anxiety investors have about the future.

Powell had inspired a bit of confidence in his Wednesday press conference when he said he sees a path forward for a soft landing in which the Fed is able to tamp down inflation without causing the economy to crash in tandem.

“In principle, it seems as though by moderating demand, we could see [job] vacancies come down as a result … and I think put supply and demand at least closer together than they are, and that would give us a chance to get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially,” Powell said.

“So, there is a path to that. Now, I would say I think we have a good chance to have a soft, or a softish, landing or outcome, if you will,” he said.

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In the Wall Street Journal’s regular survey of economists, an increasing number of forecasters now anticipate that the central bank’s efforts to rein in inflation will cause a hard landing. Nearly 30% of those surveyed predict a recession within the next year, up from 18% who said the same in January.

A recession would be deleterious for President Joe Biden and the Democrats heading into the midterm elections. Biden already has a lot of blame from voters for the higher prices, and if the economy flatlines, Democratic chances of holding on to Congress dim even further.