US stocks fell as a result of a drop in tech shares, while Treasuries fell as a result of a surprise Bank of Canada rate increase, fueling speculation that the Federal Reserve will continue to tighten.

The Nasdaq 100 fell 1.8%, with Alphabet and Microsoft losing at least 3%. It was the first drop in the technology-heavy gauge in the previous five sessions. Before Wednesday's pullback, megacap tech companies had propelled the S&P 500 to the verge of a bull market. After weeks of underperformance, the small-cap Russell 2000 gained 1.8% for the second day in a row.

Yields on the policy-sensitive two-year note rose to 4.56% as traders increased their bets on a quarter-point increase in US interest rates by July.

The tech sector is being weighed down by expectations of higher interest rates for a longer period of time in order to combat inflation. The Federal Reserve and the European Central Bank will make policy decisions next week, with the Fed signaling that it may pause rate hikes in June before resuming them later.