The Dow finished with a decline of 1,033 points, the second-worst in history, eclipsed only by Monday's 1,175-point plunge.
Thursday's plunge puts the stock market into correction territory, with stocks down about 10 percent from their record high on January 26, according to Bankrate.com. The 10-year Treasury yield briefly hit a four-year high of 2.88 percent.
In currency terms, the euro fell 0.2% to $1.2244 while sterling closed 0.4%, its first advance in a week, likely on the back of Bank of England's Mark Carney's suggestion at another rate hike earlier than anticipated. "They could be in full panic mode right now".
Lutz said traders were finding bargains in the market on Tuesday in home-builder and some tech stocks, including Apple, which had seen its share price fall 10 percent from a record high of $180 on January 19. The so-called fear gauge tracks traders' expectations for future instability and moves opposite the S&P 500 most of the time.
Wall Street is having another rocky day.
Additionally, last week, former U.S.
USA 10-year yields rose back as high as 2.80 percent after approaching two-week lows around 2.65 percent on Tuesday.
"When the market declines sharply, everyone naturally wonders, 'What's wrong?' Nothing is wrong economically", said Greg McBride, chief financial analyst for Bankrate.com, according to NBC News.
The Standard & Poor's 500 index, the benchmark for many index funds, also wavered between gains and losses.
"Despite violent moves in the last couple days in the market, fundamentals in the economy are very strong and it's not just the USA, it's throughout the global economy", said Alicia Levine, head of global investment strategy at BNY Mellon Investment Management in NY. "That money will ultimately find its way back into the stock market".
The yield on the 10-year Treasury note rose to 2.86 percent. Even with the rebound, this was the worst week for the market in about two years.
US equity indexes fluctuated on Tuesday after a tumultuous morning that saw the Dow Jones Industrial Average swing more than 900 points in 25 minutes. But such calm is unusual, and stocks overheated.
Economies around the world are strengthening and corporate profits are on the rise.
"Although there are a couple of things in the way of flawless scenarios, that being interest rates and bond yields and what not, people are still looking at equities as a good investment and they still believe that there is going to be continued upside", said Peter Costa, president of trading firm Empire Executions in NY.