The S&P 500 closed at 2,822.43 for a loss of -31.10 points or -1.09%.
Besides rising yields, telecom stocks were also hit by reports that the USA government was planning to build a super-fast 5G wireless network to counter China's spying on calls.
Although the recent uptick in bond yields has prompted some analysts to question how much longer relatively risky stocks will remain attractive relative to Treasurys, some investors say the moves have yet to pose a threat to the stock rally.
Shares of utilities and real-estate companies, considered by many investors to be bondlike due to their relatively hefty dividends, were among the biggest decliners in the S&P 500, falling alongside U.S. Treasury prices. The Nasdaq dropped 0.9 percent, to 7,402.48.
The four FANG stock tech leaders traded higher.
"With the 10-year rate shooting above 2.7 percent, the cost of capital for equity investments also just increased", said Alexandra Coupe, associated director for Pacific Alternative Asset Management Co.
Deal news drove swings in individual stocks, with shares of Dr Pepper Snapple Group jumping 21.42, or 22%, to 117.07 after the company said it would be acquired by Keurig Green Mountain.
Among earnings, Pfizer shares fell 3.3 percent.
Bond prices fell. The yield on the 10-year Treasury note rose to 2.74 per cent. The Dow had its biggest decline since May, losing 362.59 points, or 1.4 percent, to 26,076.89. Japan's Nikkei 225 Index plunged by 1.4%, while Hong Kong's Hang Seng Index slumped by 1.1%. This lead to stocks on Wall Street falling by around one per cent. Mr. Wynn has denied the allegations.
Markets could feel some early lift from response to President Trump's Tuesday night State of the Union address to Congress. Investor's ears will certainly be turned toward this afternoon's policy announcement from the Federal Open Market Committee, scheduled for 2 p.m. and the final FOMC meet under Federal Reserve Chair Janet Yellen. But some investors speculated that the growing strength in the USA economy and labor market could prompt the central bank to perhaps forecast an extra rate increase this year.
Kenan Machado contributed to this article.