Stocks tumbled after data showing a slowdown in consumer spending, the main driver of the US economy, fueled concern about a recession.

The S&P 500 index poise for its worst first half since 1962. The yield on the benchmark 10-year Treasury note plunged to about 3% from a decade-high of nearly 3.5% set earlier this month.

European stock indices set to hit year lows

US consumer spending fell for the first time this year, suggesting an economy on somewhat weaker footing than previously thought amid rapid inflation and Federal Reserve hikes. A view that central banks need to act fast because they misjudged inflation has roiled markets, with traders ramping up bets the economy will buckle under the influence of tightening campaigns.

Household sentiment is at a record low. The labor market, while still robust, is showing some early signs of softening.

"The biggest worry right now is stagflation," Fawad Razaqzada, market analyst at City Index and Forex.com, said. "That is where the global economy is headed, traders believe, and central banks won't be able to do much about it. If they fasten their belts too tightly, this will hit GDP, while if they loosen their belts again, this will only fuel inflationary pressures further. Against this backdrop, it is difficult to justifying buying stocks and that's why we are seeing support levels continually break down," he added.

What to watch this week:

• Eurozone CPI, Friday
• US construction spending, ISM Manufacturing, Friday