The blue chip index was about 11 percent from its 52-week high, in correction territory. The S&P and Nasdaq remained within 10 percent of their 52-week highs.
"I think it's a bit of bottom fishing and tracking commodity prices," said Art Hogan, chief market strategist at Wunderlich Securities.
The S&P 500 recovered to close near 1,942. The index earlier traded near 1,935 after breaking a support band around 1,937/1,941, according to Art Cashin, director of floor operations for UBS. He also noted stocks were moving in step with declines in oil.
Crude oil futures recovered from a 3 percent intraday plunge to settle above session lows, down 85 cents, or 1.82 percent, at $45.83 a barrel.
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Commodities set the tone, with copper slumping more than 3.5 percent. Traders pin the drop on global growth fears, in part due to a new report from the Asian Development Bank which cut its growth forecast for China.
Meanwhile, miners were slammed with Glencore down more than 10 percent in overseas trade.
Materials closed down 1.8 percent, after earlier plunging more than 2.5 percent, to lead all S&P sectors lower. Goldman Sachs, United Technologies and IBM put the greatest pressure on the blue chip index.
"Selling started (in) European hours where autos and materials/mining were hit. Selling was very technical in nature as prices failed at resistance and broke support. Market participants were quick to panic and sell breaks of minor support," said Ilya Feygin, senior strategist at WallachBeth Capital. "In sectors, automakers and miners were very weak along with copper."
Analysts also pointed to a sharp plunge in Volkswagen that weighed heavily on European stocks and concerns about China's economic growth as President Xi Jinping visits the United States this week.
Brad McMillan, chief investment officer at Commonwealth Financial, singled out those two factors "just because they're contributing to a general lack of confidence. We're not seeing a move up."
The U.S. dollar traded higher against world currencies, with the euro near $1.11 and the yen at 120 yen against the greenback. The dollar hit a record against the Brazilian Real and a one-week high against the Mexican Peso.
Treasury yields held lower, with the 10-year yield at 2.14 percent and the 2-year yield at 0.67 percent.
There's a "confluence of negative inputs here taking us close to technical levels in the S&P 500 that we don't want to breach," Hogan said of morning trade. The first level he's watching is 1,924.
On Monday, the Dow and S&P attempted to bounce from Friday's selloff, while the Nasdaq was dragged down by a plunge in biotechs after Hillary Clinton tweeted she would address "price gouging" in drugs.
The iShares Nasdaq Biotechnology ETF (IBB) halved losses in afternoon trade, off about 1.5 percent, after posting its worst day of 2015 Monday.
"It shows you the fragility of this market. It doesn't take much to shake confidence," said Anthony Valeri, investment strategist at LPL Financial. "Aside from the fragility, commodities are down pretty sharply. That's raising the whole emerging markets question."
The iShares MSCI Emerging Markets ETF (EEM) closed down nearly 2 percent.
JJ Kinahan, chief strategist at TD Ameritrade, noted uncertainty about the Fed's decision to keep short-term interest rates unchanged last week. But otherwise he said "there doesn't seem to be a good reason" for Tuesday's sharp declines and U.S. stocks could recover to end flat.
Dow futures plunged more than 275 points in pre-market trade, weighed by sharp declines in European stocks. The DAX closed down more than 3 percent in bear market territory, more than 22 percent below its 52-week high. Volkswagen extended losses following recent news of an emissions scandal.
U.S. auto stocks plunged in sympathy.
"The S&P futures are sharply lower this morning, breaking down from their triangle formation," BTIG Chief Technical Strategist Katie Stockton said in a morning note. "A close below 1940 by the SPX would mark a breakdown, supporting a retest of the August low near 1867. We think the downswing will ultimately present an intermediate-term buying opportunity, as per our latest Global Technical Strategy - Short-Term Overbought, but it is likely to cause some damage in the near term."
Mainland Chinese stocks bucked the trend again with a 0.94 percent gain. The Hang Seng also ended mildly higher. Japanese markets were closed for a holiday.
"Before they told us the selling started in China, now (that's) shifted to Europe over here and that shows you overall the market's getting weaker," said Adam Sarhan, CEO of Sarhan Capital.
He's watching to see if the S&P 500 can hold its Aug. 24 low of 1,867.
McMillan said "it's quite possible" stocks retest those August lows. "The damage to confidence was substantial and has to be overcome," he said.