As a result of rising interest rates, the Dow drops more than 400 points

Stocks fell sharply Tuesday afternoon as US Treasury yields rose to their highest levels in over a decade, worrying investors that higher borrowing rates could stall the housing market.

Dow fell 430 points, or 1.3%, to its lowest close since June and fall for the year. The benchmark S&P 500 fell 1.4% to its lowest level since May. The late summer selloff continued as the Nasdaq Composite fell 1.9%.

Last month, the Fed hinted at one more hike this year and higher rates through next year. Investors fear the housing market will fall next and cause a recession.

While the Fed does not set mortgage interest rates, its actions affect them. US 10-year Treasuries yields affect mortgage rates. Mortgage rates rise with Treasury yields.

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The rally ended in August as investors worried that a resilient economy and hot labor market would lead the Federal Reserve to hold interest rates higher longer to curb inflation.

Since the Fed's late-October meeting, Treasury yields and the US dollar have risen, eroding the stock market's spring gains. Stocks fall when government bond yields rise because investors can earn high returns on safer assets.

The 10-year Treasury note yield reached 4.802% on Tuesday, its highest level since August 2007. The 30-year hit 4.936%, its highest level since September 2007.