Stocks rebounded to close mixed amid worries over the economy and geopolitical tensions.
The Dow Jones Industrial Average and S&P 500 index turned higher in the final minutes of trading, while the Nasdaq finished lower.
Tech stocks were the most volatile of the day, while shares at energy companies slipped on a steep drop in oil pricesbelow $95 a barrel. The oil market also was jolted by a conflict between five Iranian boats and three US Navy ships over the weekend in the Strait of Hormuz, a major oil shipping route in the Persian Gulf.
The volatility in stocks reflected the divisions of a market split over whether the economy is headed for recession.
At their lows for the day, the Dow, Nasdaq and S&P 500 were down 10 percent off their 52-week highs, a level that would indicate a correction.
"When you have opinions split like this in two camps, all it takes is a little change of sentiment to swing things one way or another. It's like a barbell balanced on a fulcrum," said Brian Gendreau, strategist at ING Investment Management in New York City. "We didn't have this volatility last year. Now there's just a lot of things we took for granted last year at this time are in question again."
More bad news came for the troubled sector when Jefferies Group , an investment bank that focuses on mid-level companies, projected an unexpected fourth-quarter loss brought about by weak results in its high-yield and asset management businesses, trading losses and higher compensation costs.
The company projected a quarterly loss of $24 million, or 17 cents per share, compared to analyst estimates of a profit of 33 cents per share.
Citigroup saw its shares gain as the bank prepares a restructuring plan likely to be released next week, while JP Morgan Chase moved ahead as the company announced plans to hire 700 more workers at its Asia-Pacific headquarters in Hong Kong.
SLM , better known as Sallie Mae, saw its shares posting a rare gain after the troubled student loan provider named Anthony Terracciano chairman. The company's shares have been under attack, falling nearly 60 percent over the past month as CEO Albert Lord has come under fire.
In corporate news, shares of CNET slipped on a New York Times report that a group of investment funds has amassed a 21 percent stake in the media technology company and was pushing for a takeover.
Alcoa shares also fell, dropping more than 5 percent as the company prepares to release its earnings report Wednesday.
American Medical Systems spiked after the company reported a 12.7 percent gain in sales and the resignation of CEO Martin Emerson.
Meanwhile, McDonalds is taking a hit at Starbucks with plans to install coffee bars in its 14,000 U.S. stores, the Wall Street Journal reported. The report said the move will add $1 billion to McDonald's annual sales of $21.6 billion.
Apple was among the leading losers on the tech-heavy Nasdaq.
On the Dow, gainers beat losers 2 to 1, with Altria the top winner after Goldman Sachs raised its price target for the company, while Boeing suffered the biggest percentage decline among bluechips.
Drug maker Eli Lilly saw its stock rise to its highest price in more than two years after Morgan Stanley raised its evaluation of the company. Beer maker Anheuser-Busch gained more than 4 percent after it said fourth-quarter sales rose more than expected.
Falling oil prices took their toll on various companies, including ExxonMobil, Anadarko Petroleum and Apache.
-- Reuters contributed to this report.