Stocks are tanking on Monday, continuing losses from the past several trading sessions as fears about a weakening economy have gripped markets.

The Nasdaq Composite (^IXIC) dropped 4%, while the S&P 500 fell about 3% and the Dow Jones Industrial Average (^DJI) shed more than 2%, or about 1,000 points in early trading.

The 10-year Treasury (^TNX) yield fell another 10 basis points to hover near 3.69%, and is now down about 60 basis points in less than two weeks. Volatility has spiked, too, The CBOE Volatility Index, known by its ticker as simply the VIX (^VIX) shot up above 60 for the first time since 2020.

The latest leg of the sell-off accelerated overnight as Japan's Nikkei 225 (^N225) dropped more than 12% in its biggest-ever daily loss after a surprise interest rate hike from the Bank of Japan. Yardeni Research president Ed Yardeni told Yahoo Finance he thinks the "large extent" of the selloff in US stocks is attributable to the moves in Japan.

Yardeni explained that an unwinding of the so-called "carry trade" spawned from speculators borrowing in Japan at 0% interest rates and then taking that money and investing in areas of the market like the Magnificent Seven tech stocks.

"Now, with the central bank tightening while other central banks are easing, the yen suddenly had a big move to the upside and that strength, really led to a lot of margin calls of these speculative positions," Yardeni said. "That's all coming unglued. And I think it's a lot of margin calls, and I think it's going to happen pretty quick, and the unwind should be over by the end of the week."

The sell-off in US stocks also came as investors also adjusted their expectations for domestic monetary policy.

A weaker-than-expected July jobs report, which revealed a widely accurate recession indicator tied to a rise in the unemployment rate had triggered, exacerbated fears that Fed policy may be too restrictive.

Subsequently, markets have quickly shifted to price in higher chances of more rate cuts this year. As of Monday morning, markets are pricing in a roughly 95% chance of a 50 basis point interest rate cut by the end of the Fed's September meeting, up from a less than 12% chance a week prior, per the CME FedWatch Tool.

Still, some Wall Street strategists don't think the move in markets is a clean bet on a flailing US economy.

"I don't necessarily buy the fact that the market is voting that the economy is just weakening outright overnight," Charles Schwab senior investment strategist Kevin Gordon told Yahoo Finance. "I think it takes a little bit longer, for us to get a sense of that."

Gordon notes that since the recent market highs in July, defensive sectors like Consumer Staples and Utilities have led the market, while the largest losses have been seen in Technology.

"The sector action is telling me that it's much more about selling the high flyers and making some profits...It's not this outright collapse in the cyclical trade."

To Gordon, the recent market reaction to the jobs report was in sync with sentiment showed by investors following big tech earnings. In both cases expectations were likely too upbeat compared to the actual data.

"It's a good reminder that this is really all about expectations and not necessarily about good versus bad when it comes to data," Gordon said.

On Monday, big tech remained the main culprit of the sell-off, with Nvidia (NVDA) sliding nearly 10%, while Apple (AAPL), Meta (META) and Microsoft (MSFT) were all off more than 4%.