"Now we are having acute attention on what happens in the bond markets, so when yields move up there is an unsettling feeling in the equity market".
The U.S. dollar was barely up against a basket of currencies, paring gains as Wall Street rallied late.
The Dow finished down 4.6 percent at 24,345.75.
In the end, the S&P 500 sank 3.8 per cent, taking its rout since a January 26 record past 10 per cent to meet the accepted definition of a correction. The Nasdaq Composite closed at 7,051.98 for a loss of -63.90 points or -0.90%. But the Dow is up 24 percent in the past 12 months the S&P 500 has gained 18 percent.
Trading has been turbulent all day. At its worst on Monday, the Dow was down more than 1,500 points.
The losses in the market since the beginning of last week wiped out about a quarter of that gain.
The Dow Jones Industrial Average plummeted 4.2 per cent to 23,860.46.
Corrections are seen as entirely normal during bull markets, and even helpful in removing speculative gains and allowing new investors to buy into the market at lower prices.
Several factors are contributing to the return of neck-wrenching volatility this week after years of absence in the market. "With financial markets vulnerable at the moment, this was not great timing for such political brinksmanship".
Utah Jazz Trade Rodney Hood to Cleveland Cavaliers
After a whirlwind of activity by the Cavaliers today, Rose found himself traded to the Utah Jazz as part of a three-way deal. They didn't put too much pressure on their prospects to perform right away and allowed them to develop at their own pace.
The Congressional Budget Office says the two-year budget deal will add $320 billion of spending.
U.S. stocks began to stutter again on Wednesday after an early surge, in a sign that investors are still spooked by the market's recent retreat and wary more fallout is to come.
Rising interest rates, another commonly cited culprit pressuring stocks this week, were bouncing around Thursday with the closely-tracked 10-year yield rising to 2.86% in the morning before moving back down to 2.82% as stocks sold off.
The market mood turned decidedly fearful the last two days.
Earlier on Thursday, the 10-year US Treasury note yield rose as high as 2.884 per cent, nearing Monday's four-year peak of 2.885 per cent, after the Bank of England said interest rates probably needed to rise sooner than previously expected.
Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management, said the plunge wasn't caused by inflation fears alone.
Those losses came as little surprise, with moves in major U.S. markets providing the cue for global investors.
Investors are prepared for more volatility as they try to decipher if this is just temporary or a deeper correction will take place. In both the 1929 crash and 2008 crash the market dropped 50 percent, in 2008 we were more prepared to keep it less devastating across America.
China's stock market benchmark has fallen as much as 5.5 percent after the sharp sell-off on Wall Street. Britain's FTSE 100 fell 1.5 percent and the French CAC 40 lost 2 percent.
Brent crude, used to price global oils, lost 58 cents to $64.23 in London.