U.S. stocks closed off their session lows on Monday amid a late rally in the energy sector.
"I just think it's bargain hunting from oversold conditions," said Peter Cardillo, chief market economist at First Standard Financial.
The Dow Jones industrial average closed 177 points lower, with Goldman Sachs and Home Depot weighing the most on the index. The index, however, fell as much as 401.42 points on Monday. Chevron closed the session as the biggest advancer in the Dow.
The S&P 500 dropped 1.4 percent, with financials and materials lagging. Energy, however, rose in late-afternoon trading, and closed as the only advancing sector.
The Nasdaq composite shed over 3 percent at session lows and closed 1.8 percent lower, as Apple gained 1 percent.
"It might have been people saying the pendulum has swung too far to one side," said JJ Kinahan, chief strategist at TD Ameritrade. "There are a lot of things going on right now and people are trying to rectify where they truly should be."
U.S. stocks were sharply lower for most of Monday trading, as global growth concerns weighed on investors.
"I think it's worries that the global economy is slowing down more than expected and that's translating into lower oil prices," said Kate Warne, investment strategist at Edward Jones.
Crude prices resumed their downward trajectory, with WTI closing 3.88 percent lower, or $1.20, at $29.69 a barrel, but rose above $30 a barrel in after-hours. Last week, U.S. oil fell about 6 percent.
"Like it or not, we use oil as a barometer for the global economy," said Art Hogan, chief market strategist at Wunderlich Securities.
Gold futures for April delivery surged 3.47 percent to close at $1,197.90 an ounce, and broke above $1,200 for the first time since June. The precious metal also recorded its best trading day since December 2014.
"The gold trade is signaling a retreat in global inflation," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "In times of economic stress ... gold acts as a store of value."
He also said that, in order to stem this sharp sell-off, "you're going to need for some tangible evidence that the global economy is not slowing down, and that's China."
Chinese markets are closed this week due to the Lunar New Year holiday.
"Without something fresh to sort of turn the tide on this, I think the path of least resistance is to the downside," Wunderlich Securities' Hogan said.
With no major economic data due Monday, investors looked ahead to Fed Chair Janet Yellen's testimony in Congress on Wednesday and Thursday.
"We have the most cautious Fed chair I've seen in many, many years," said Maris Ogg, president at Tower Bridge Advisors. "I think we're going to get a reiteration ... of what we saw in the minutes."
However, First Standard's Cardillo said that "if she would hint that wages are rising, but still not at levels that would constitute a rate hike, then that would turn things around."