So while the market plunge might rattle investors and ding consumer confidence, it is not a sign that the economy is in trouble.
Analysts have also been saying the market has gotten much too expensive after a huge run-up over the previous year and has been long overdue for a pullback.
"The mood on the floor is relief", said FTN Financial chief economist Chris Low, adding that the Dow's "violent" descent on Monday - at one point losing 700 points in a few minutes - would not soon be forgotten.
In New York, the Dow was down 1,032.89 points, or 4.15 per cent, to 23,860.46, and the S&P 500 index was down 100.66 points, or 3.75 per cent, to 2,581.00. The Nasdaq composite rose 2.1 percent to 7,115.88.
Stocks closed sharply higher on Wall Street after another turbulent day of steep ups and downs.
Trading has been choppy for days, and the market has swung in wide ranges - up and down almost 2,300 points over the past week. The benchmark gauge for USA share volatility went through wild gyrations after hitting a two-year high. European markets raced higher, while stocks in Asia were mixed. The Dow had never lost more than 777 points in a single day. But the Dow is up 24 percent in the past 12 months the S&P 500 has gained 18 percent.
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After regular trading hours on Monday, S&P 500 E-mini stock futures rose 0.73 per cent, suggesting some traders expect Wall Street to open with a gain on Tuesday.
The market got off to a mixed start on Thursday but has fallen steadily as the morning wore on. Brent crude gave up 70 cents, or 1.1 percent, to $US64.81 per barrel.
Both the Dow Jones industrial index, which consists of 30 big US firms, and the S&P 500, which is considered a broader market barometer, had erased their gains for this year on Monday. After its 1,175-point nosedive Monday, the Dow Jones industrial average lost 567 points right after trading began. The euro was up 0.4 per cent at $1.2415 while the dollar rose 0.1 per cent to 109.22 yen.
Twitter soared 26 percent early Thursday after reporting its first-ever quarterly profit. Energy companies dropped along with oil prices and technology companies also declined.
In Toronto, the S&P/TSX composite index was down 264.97 points, or 1.73 per cent, to 15,065.61, in a broad-based decline.
Friday's jobs report showed wage growth, supporting the notion the Fed may act quickly on interest rates and prompting the Dow to fall 666 points. Gold fell $7, or 0.5 percent, to $1,329.50 an ounce and silver dipped 9 cents, or 0.5 percent, to $16.58 an ounce.
The blue-chip stock average's recent drubbing, which follows its record 1,175-point drop Monday, has been fueled by fears that a long period of low interest rates and tame inflation that have boosted the economy and fueled a rapid rise in stock prices may be nearing an end as economic conditions improve.