Earlier in the day it had dropped by 500.
The Dow Jones industrial average lost 1,032.89 points, or 4.1 per cent, to 23,860.46.
Both the Dow and the S&P 500 are headed for their worst weekly decline since 2015, analysts said.
Asian stocks are coming under heavy selling pressure, with benchmark indexes in China, Hong Kong, Japan and South Korea losing 2-5 percent, as the downtrend in oil prices added to worries over higher US bond yields.
The S&P 500 fell 22 points, or 0.9 percent, to 2,558 as of 1:53 p.m. She says among the reasons for the recent selloff on Wall Street is last week's announcement of the USA having its lowest unemployment level in 17 years. The indexes reached their latest record highs just two weeks ago. Those stocks are often seen as substitutes for bonds because they tend not to fluctuate that much in price and provide steady income. That's also a big change: The market has been stable in the a year ago because every time it inched lower, investors swooped in looking for bargains and soon sent them higher again.
The yield on the 10-year Treasury note rose to 2.86 percent. The Nasdaq composite added 97.33 points, or 1.4 percent, to 6,874.49.
The early rally in USA stock indexes followed a broad slide in global markets.
The pan-European Stoxx Europe 600 index declined 1.6 percent. Those stocks fall out of favor when bond yields rise, as they have been for the past few months, and many expect the trend to continue. Tokyo's Nikkei 225 was off 3.2% at 21,180.28 and Hong Kong's Hang Seng fell 4.2% to 29,142.87.
In Washington, President Donald Trump signed a $400 billion budget deal Friday that sharply boosts spending and swells the federal deficit, ending a brief federal government shutdown.
After hitting a high two weeks ago, U.S. stocks started to tumble last week after the Labour Department said workers' wages grew at a fast rate in January.
Investors anxious that rising wages will hurt corporate profits and could signal an increase in inflation that could prompt the Federal Reserve to raise interest rates at a faster pace, putting a brake on the economy.
Fidelity International's chief investment officer for Japan, Takashi Maruyama, said the "massive volatility" was a reaction to the rapid rise on the Japanese market since previous year.
The Australian and New Zealand dollars have fallen against their USA equivalent, central and eastern European currencies like the Polish zloty and the Hungarian forint have fallen against the euro, while the pound is lower against both the U.S. dollar and the euro even after the rally on Thursday sparked by the Bank of England's warning that interest rates are likely to rise more rapidly than expected.
Financial analysts regard corrections as a normal market event but say the latest plunge might have been triggered by a combination of events that rattled investors.
At the heart of this week's pullback in the market has been a rise in USA bond yields due to growing expectations that a robustly performing economy will lead to higher inflation and a steady rise in official interest rates over this year.
Not only are corrections common during bull markets, they're seen as entirely normal and even healthy. Many market watchers have been predicting a pullback, saying stock prices have become too expensive relative to company earnings.
"No one can say for sure, but things don't look pretty out there given that the sharp falls haven't been bought this time around". It's still up 15 percent over the past year. The last bear market was during the 2008 financial crisis.
The economy is already running hot, with the nation's unemployment rate at a 17-year low of 4.1 percent. The housing industry is solid. And major economies around the world are growing in tandem for the first time since the Great Recession. That combination usually carries stocks higher.
Technology companies accounted for most of the broad gains, outweighing losses in energy stocks, which slumped as US crude prices declined. It could prompt the Federal Reserve to raise interest rates at a faster pace, which would act as a brake on the economy.
The market didn't get much help Thursday from company earnings reports, several of which disappointed investors. The euro slipped to $1.2263 from $1.2276.