The Dow recovered some of its early plunge and was down 127 points, or 0.4 percent, at 24,255. The Nasdaq and S&P 500 were both down again after trading more than one per cent higher earlier today. The S&P 500 has more than tripled in that time.
The selling on Wall Street has left the stock market on the verge of a "correction", which signifies a 10% retreat from a previous high.
Corrections are seen as entirely normal during bull markets, and even helpful in removing speculative froth and allowing new investors to buy into the market at lower prices.
However, the overall trend has been positive, with Australian markets rising about 27 percent over the last two years, including yesterday's losses.
Defensive sectors including utilities and real estate lagged. We have a stronger economy so the Fed should continue to tighten ...
In early trading Tuesday, the Dow Jones industrial average briefly fell 10 percent below its most recent record of 26,616.71 set on January 26. Those stemmed from the USA jobs report on Friday (Saturday NZT). During his first year, stock markets hit unprecedented levels, routinely clearing never-before-reached all-market highs.
The dollar, commonly considered to be relatively safe during times of market upheaval, was steady against most currencies, though slipped slightly against Japan's yen, also considered a safe haven. "It's going to be a volatile ride for the next several trading sessions", saidChad Morganlander, portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.
"However once this kind of stampede starts it's hard to stop".
Asian indexes, particularly the Nikkei 225, often follow trends of USA markets.
The UK's benchmark stock index tumbled 3.5 per cent shortly after the market open, mirroring similar losses across France, Germany and other European markets. All three were lower earlier.
The slump means the Dow Jones has wiped out of all of its gains so far in 2018, following months of surges fuelled by optimism about the U.S. economy, corporate earnings and the global outlook.
Some analysts said the market's slump, though a surprise, was looming after such a rapid advancement. "A correction is usually about a 10 percent decline in the market, and we're nowhere near that, so we could fall quite a bit more or you could get a lot of bad headlines, and still it really wouldn't be the end of the world".
"The choppiness this morning is trying to figure out where we should be", Willie Delwiche, investment strategist at Robert W. Baird in Milwaukee, said.