U.S. equities closed sharply lower on Tuesday as concerns of slower economic growth persist, despite the Federal Reserve's emergency interest-rate cut.
The Dow Jones Industrial Average closed down 785.91 points, or 2.94 percent, to 25,917.41, after falling by as many as 997 points at session lows.
The S&P 500 erased 86.86 points, or 2.81 percent, to 3,003.37. The Nasdaq Composite Index fell 268.07 points, or 2.99 percent, to 8,684.09.
All of the 11 primary S&P 500 sectors closed lower, with technology and financials dropping 3.79 percent and 3.73 percent, respectively, representing the two worst-performing groups.
The Cboe Volatility Index, widely considered the best fear gauge in the stock market, jumped 10.17 percent to 36.82 on Tuesday.
The major averages had a short-lived surge with the 30-stock index climbing more than 300 points earlier in the session after the U.S. central bank lowered the target range for the federal funds rate by 50 basis points to 1-1.25 percent amid COVID-19 concerns.
In a surprise announcement on Tuesday, the Fed said that "in light of these risks and in support of achieving its maximum employment and price stability goals," the Federal Open Market Committee (FOMC), the Fed's policy-setting body, decided to cut its key interest rate by 0.5 percentage point.
Federal Reserve Chairman Jerome Powell said in a press conference that since the January FOMC meeting, the spread of the coronavirus has brought new challenges and risks. "The magnitude and persistence of the overall effects on the economy, however, remain highly uncertain, and the situation remains a fluid one," said Powell.
"The rate cut is important for what it signals - that policymakers are here to support - and for sentiment," Solita Marcelli, deputy chief investment officer for the Americas at UBS Global Wealth Management, said in a note to Xinhua on Tuesday, while commenting on the Fed rate cut.
"Markets were already pricing in rate cuts, which is why we don't see stocks rallying today," said Marcelli.
The emergency rate cut failed to calm investors. On the bond market, the yield on 10-year U.S. Treasuries dropped below 1 percent for the first time. Gold, meanwhile, jumped about 3 percent to settle at 1,644.40 dollars per ounce.
"We remain overweight emerging market stocks, which have started to outperform developed markets in recent days given China's relative success in containing the virus and elevated uncertainty in developed markets," Marcelli said.
U.S. equities have been experiencing great fluctuations these days. The stocks closed sharply higher on Monday with the Dow up nearly 1,300 points, its best one-day point gain in history.
For the week ended Feb. 28, the blue-chip Dow plunged nearly 3,600 points, or more than 12 percent. The broader S&P 500 and the Nasdaq both declined more than 10 percent.