The S&P 500 and Nasdaq 100 slipped even lower after the S&P 500 suffered a heavy fall in the first half of the year. Such a decline has not been seen in more than 50 years. The yield on 10-year US Treasuries fell below 3%, to its lowest since early June.

European stock indices are tumbling following the US ones. There is a chance that they will hit this year's lows.

Meanwhile, European equities traded slightly higher, with retail, utilities and real estate outperforming.

German government bond yields rose briefly after Euro zone inflation data hit another record high.

On Friday, sellers were focused on risky assets as fears of recession trumped fears of soaring inflation. With Federal Reserve policymakers determined to return price growth to the 2% target, investors are assessing the blow to the economy from a sharp rate hike.

"Inflation is the key focus of central bankers; investors losing money is way down their list of concerns," Chris Iggo, chief investment officer at AXA IM Core, wrote in a note to clients. "Interest rate and inflation markets are taking the view that what is priced in terms of monetary tightening will be enough to bring inflation down, but in order for that to happen, there also needs to be a cost to growth."

Both stocks and bonds were rocked by outflows this week as investors fear the global economy could contract amid sky-high inflation and hawkish central banks. About $5.8 billion exited global equity funds in the week through June 29, BofA said, citing EPFR Global data. Bonds had redemptions of $17 billion.

Global companies have pulled more debt sales in the past six months than in all of 2020. More than 70 deals have been postponed or canceled so far in 2022, according to data compiled by Bloomberg.

What to watch this week:

US construction spending, ISM Manufacturing, Friday