U.S. stocks closed lower, after a failed attempt to rally from the Dow's worst 3-day point decline in history, as investor confidence waned amid continued concerns about China and global growth.
The Dow Jones industrial average and the S&P 500 closed about 1.3 percent lower after rallying nearly 3 percent earlier, their biggest reversal to the downside since Oct. 29, 2008. The S&P 500 remained in correction territory after falling there on Monday. The index also posted its first six-day losing streak since July 2012.
"That crash (Monday) was so big and so long since we had one (investors) don't want a repeat of 2008 so they bail out," said Lance Roberts, general partner at STA Wealth Management.
The Dow fell 205 points and S&P 500 closed below 1,900 after falling into negative territory in the last half hour of trade. The Nasdaq Composite failed to hold slight gains and closed 0.44 percent lower.
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"Whatever triggered the consternation in the last few trading sessions is likely to be replayed again," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. He said a negative close "would be a set up to grind sideways to work out this process, if this rally and enthusiasm can't last I think it's an indicator (of that consternation)."
Earlier, the Dow gained as much as 441.5 points. Apple clung to gains of 0.6 percent after earlier surging 6 percent.
"This is typical after a wild swing we had yesterday," said Peter Cardillo, chief market economist at Rockwell Global Capital. "It's just going to take some time for confidence to rebuild in the market."
In the open, the Nasdaq outperformed, up more than 3.5 percent with Netflix and Chinese stocks such as JD.com andBaidu among advancers. Alibaba gained 4.2 percent.
The S&P traded about 1 percent higher and struggled to hold out of correction territory on an intraday basis. In the open, no stocks in the index hit new 52-week highs or lows, after about 200 names hit new 52-week lows Monday.
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However, the gains fell short of recouping Monday's more-than-3.5 percent plunge and the Dow remains on pace for its biggest monthly percentage loss since February 2009 and the Nasdaq since 2008. The S&P 500 is on track for its largest percentage loss since May 2010.
"It's not as great as a bounce that many were anticipating," said Kevin Mahn, chief investment officer at Hennion and Walsh. "I think obviously the market sold off far more than it should have."
"We kind of dipped into that correction territory but we're not going to stay there," he said, noting the S&P 500 should trade more in pullback territory between 5 to 10 percent than in correction mode, between 10 to 20 percent lower.
Some of the things "bothering markets yesterday were China and collapsing commodity prices and both of those have given us some relief and when I look at China I don't look at the Shanghai market. I look at the Hong Kong market," said James Meyer, chief investment officer at Tower Bridge Advisors.
The Hang Seng closed up 0.72 percent, while the Nikkei plunged 4 percent and the Shanghai Composite extended recent losses to fall below the psychologically key 3,000 mark, down 7.6 percent. However, European stocks surged, with the DAX up nearly 5 percent.
Crude oil futures settled up $1.07, or 2.80 percent, at $39.31 a barrel. Brent traded more than 1 percent higher to above $43 a barrel.
This article originally appeared on CNBC. Read more from CNBC:
