A gain above 3.26% would have been the Nasdaq's best day since August 2015, and the index flirted with that level late in the afternoon before falling just before the close. The Dow Jones Industrial Average rose 1.6 percent to 24,984.55 and the Nasdaq surged 3 percent to 7,318.34 after its biggest drop in seven years.
Twitter soared 12.1 percent to $30.85 and electric vehicle maker Tesla jumped 7.8 percent to $311 after releasing their quarterly reports, while video game maker Take-Two vaulted 7.9 percent to $1219.75 after strong reviews for its latest game, "Red Dead Redemption 2". The Dow lost 125.98 points, or 0.5 percent, to 25,191.43.
The Nasdaq dropped almost 2 percent, sharply cutting its gains for the year and moving deeper into correction territory, while the blue-chip Dow shed 1.1 percent and the benchmark S&P fell 1.56 percent, putting under threat their slim gains for the year.
The recent turbulence in financial markets is a contrast to what investors have grown accustomed to in a bull market that has lasted more than 10 years, the longest in history.
"Chief among them is a Fed that seems determined to continue steady rate increases despite growing signs of weakening global growth as China struggles to stabilize its economy and markets all while us trade tariffs loom", Young said.
Despite signs of weakness in the housing market, the US economy appears to be very strong.
Asian stock markets opened in the red on Thursday, a day after technology stocks hit Wall Street with the largest daily decline since 2011 and wiped out all of this year's gains.
Amazon, Alphabet, Mattel and other big companies fell sharply after turning in disappointing quarterly results.
Colgate-Palmolive sank 5.3 percent after its results fell short.
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McDonald's rose 6.1 percent after it beat estimates for quarterly same-store sales on strong demand in worldwide markets, while Verizon rallied to an 18-1/2-year high after beating estimates for profit and net new phone subscribers.
US bond prices edged lower. Heating oil jumped 1.1 percent to $2.30 a gallon and natural gas fell 0.5 percent to $3.19 per 1,000 cubic feet.
Following the heavy falls on global markets, ASX futures slumped by nearly 100 points, indicating falls of more than 2% on the local index today. The yield on the 10-year Treasury note rose to 3.14 percent from 3.12 percent.
"The ability to repeat what we had this year is not going to happen", said Terry DuFrene, global investment specialist at J.P. Morgan Private Bank.
Communications stocks were among the biggest gainers.
The French CAC 40 jumped 1.6 per cent and Germany's DAX added 1 per cent. Britain's FTSE 100 inched up 0.1 percent.
ENERGY: Benchmark U.S. crude edged up 0.6 percent to settle at $66.82 a barrel in NY. Brent crude, the benchmark for global oil prices, rose 0.5 percent to $76.56 a barrel in London. In Asia, Japan's benchmark Nikkei 225 lost 0.4 per cent, while South Korea's Kospi dropped 1.8 per cent. Australia's S&P/ASX 200 was flat. Silver gained 1.4 percent to $14.79 an ounce.
The dollar climbed to 112.64 yen from 112.44 yen. Copper was little changed at $2.76 a pound.
But it has risen to 54.8 British pence and 62 Euro cents, after some weaker-than-expected European economic figures.