Japan's Nikkei index is back on track to close more than 3% lower after a brief rally.
Bond prices fell. The yield on the 10-year Treasury rose to 2.85 percent from 2.83 percent late Thursday.
In London, the FTSE 100 had also experienced a sharp fall on Thursday - dropping by 109 points, or 1.5%, after the interest rates were likely to rise earlier and more sharply than previously thought.
Technology companies accounted for most of the broad gains, outweighing losses in energy stocks, which slumped as USA crude prices declined, sending the price of oil below $60 a barrel for the first time this year. Even after this week's losses, the S&P is up 12.5 percent over the past year. The yield on the 10-year note was as low as 2.04 percent as recently as September. Those include worries about a potential rise in US inflation or interest rates and whether budget disputes in Washington might lead to another government shutdown.
Investors anxious that rising wages will hurt corporate profits and could signal an increase in inflation that could prompt the Federal Reserve to raise interest rates at a faster pace, putting a brake on the economy.
"There are a lot of risks ahead and we've been lulled into a false sense of security over the last couple of years with central banks keeping rates low for a very long time", Steve Goldman, Kapstream Capital head and portfolio manager, told Bloomberg TV."Risk assets are going to continue to perform well albeit with a lot more volatility than what we've seen in the past".
Chinese H-shares listed in Hong Kong fell 0.72 percent to 12,343.8, while the Hang Seng Index was up 0.06 percent at 30,342.53. GrubHub jumped $21.44, or 30.7 percent, to $91.34, while Yum Brands dipped $1.22, or 1.5 percent, to $78.91.
The yuan was quoted at 6.318 per US dollar, 0.56 percent weaker than the previous close of 6.283.
In Europe, markets were unnerved also by the Bank of England's indication on Thursday that it could raise its key interest rate in coming months due to stronger global economic growth.
The Hong Kong stock market on Thursday snapped the five-day losing streak in which it had plummeted more than 2,550 points or 8 percent. Facebook and Boeing have both fallen sharply.
The market, now in its second-longest bull run of all time, had not seen a correction for two years, an unusually long time.
Analysts have also been saying the market has gotten much too expensive after a huge run-up over the past year and has been long overdue for a pullback. The housing industry is solid, and manufacturing is rebounding. That combination usually carries stocks higher.
Despite the dramatic falls, analysts have been cautious in their interpretation of the market moves, pointing out that corrections of this kind are normal and that global markets are still at historically high levels. WTI light sweet crude oil was down 64 cents or 1 percent to $61.15/bbl.