The Dow Jones Industrial Average fell 799.36 points (3.10 per cent) to 25,027.07.
The Nasdaq composite lost 240 points, or 3.2 percent, to 7,201. The VIX Volatility Index was higher at 20.59 for a gain of 4.15 points or 25.24%.
U.S. stocks have nosedived amid concerns about trade with China and fears of a weakening economy.
The focus now is on the spread between the two-year and 10-year yields, currently at its narrowest in over a decade and whose inversion has preceded the past three United States recessions.
The difference in yield between the two- and 10-year US Treasury notes has narrowed sharply in recent days, raising concerns about a so-called "inversion" in which interest on short-term bonds overtakes the rate on long-term bonds.
As the markets opened Tuesday, President Trump began tweeting about his administration's trade negotiations with China. The Treasury held auctions for four-week bills at a rate of 2.320% and 52-week bills at a rate of 2.635%. The Nasdaq composite gave up 84 points, or 1.1 percent, to 7,356.
The S&P 500 is up 26.45 points, or 1 percent.
The Dow Jones Industrial Average sank nearly 800 points Tuesday.
The Dow sank as much as three percent Tuesday afternoon as losses on Wall Street accelerated amid worries about the US economic outlook and skepticism over the US-China trade truce.
Gold gained 0.6 percent to $1,246.60 an ounce. In Japan, the Nikkei 225 index fell 0.4 percent to 21,946.94. Citigroup fell 5.4 per cent to $61.63.
USA markets remained closed on Wednesday as part of a National Day of Mourning for the passing of former 41st President George H.W. Bush.
The wave of selling erased the market's gains from a day earlier, when stocks rallied after the administration said US and China agreed to a temporary truce in their trade dispute. Toll's shares slid 1.6 percent to $32.99.
Apple lost 3.7 percent to $177.99 after the consumer electronics giant was downgraded by HSBC analysts, citing the possibility that iPhone volume and value growth may moderate due to a saturated mobile phone market.
Bank of America fell 5.1 percent.
The price of oil is really in bear territory. The contract rose 30 cents on Tuesday to close at $53.25. Brent crude, the worldwide standard, added 0.9 percent to $62.22 per barrel in London.
The S&P 500 index lost 23 points, or 0.9 percent, to 2,766.
The dollar weakened to 112.82 yen from 113.69 yen late Monday. The euro declined to $1.1330 from $1.1343.
Investors have also grown anxious about fluctuations in the bond market.