(Adds investor comment, links to related market reports)
NEW YORK, Feb 6 (Reuters) - U.S. stocks wavered between gains and losses in volatile trading on Tuesday a day after the biggest one-day drops for the S&P 500 and Dow in more than six years.
After an initial 2-percent drop, major Wall Street indexes recovered but did not sustain the rebound. Between the day's highs and lows, the Dow Jones Industrial Average traded in an almost 1,000-point range.
European equities hit a six-month low, with London and Paris indexes each down more than 2 percent. Hong Kong and Tokyo stocks saw steeper drops. Bond prices gained.
U.S. Treasury Secretary Steven Mnuchin played down worries about a selloff in U.S. and global stock markets, saying that recent volatility was not enough to rock market fundamentals.
Following are comments from analysts and investors:
TREVOR GREETHAM, HEAD OF MULTI ASSET AT ROYAL LONDON ASSET MANAGEMENT IN LONDON
"When you get these periods of intense panic it makes sense to be buying while others are forced sellers but on the other hand you don't know that the negative mood will go away quickly.
"The last time we had that degree of panic was August 2015 which was the first of the two Chinese devaluations. At that time, it took about eight weeks before the market digested the bad news and started rallying again ... The trick is not to rush on both feet but to be buying gradually during the more intense negative days."
ERIC WINOGRAD, SENIOR ECONOMIST AT ALLIANCEBERNSTEIN IN NEW YORK
The correction we are seeing is not economically significant at this point. The stock market is basically flat year-to-date and up significantly over any longer time horizon. The underlying economy is strong and over time that should provide support to the market.
"That said, we dont expect a repeat performance from the stock market in 2018. We expect interest rates to rise across the curve, driven in part by mounting inflationary pressures as reflected in last months wage increases.
"Higher interest rates will make it harder for the stock market to sustain lofty valuations and so we expect a lower return and higher volatility from the equity market this year.
JANNA SAMPSON, CO-CHIEF INVESTMENT OFFICER AT OAKBROOK INVESTMENTS LLC IN LISLE, ILLINOIS
""We're bouncing around here. The market clearly hasn't decided what the sentiment for the day is."
MICHAEL ARONE, CHIEF INVESTMENT STRATEGIST AT STATE STREET GLOBAL ADVISORS IN BOSTON
What is happening is you continue to have investors re-rating stocks based on higher inflation and higher interest rate expectations.
"There was heavy, heavy positions in long equities, short Treasuries, short dollar, low volatility and as this has changed, some of those players are certainly getting out of those positions and it is exacerbating some of the volatility.
"The other thing is, certainly we have a government shutdown pending, and even with the correction nobody is really talking about it. But that is certainly upcoming here, many are expecting a deal will be struck or they will kick the can down the road until March ... Also this transition in Fed leadership, until we see what Powell policy is, the markets arent likely to give the Fed the benefit of the doubt until they see what is going to happen in terms of policy."
BRENT SCHUTTE, CHIEF INVESTMENT STRATEGIST AT NORTHWESTERN MUTUAL WEALTH MANAGEMENT CO
"We think that this is a correction, not the start of a recession. Recessions cause prolonged market downturns, corrections occur when people are positioned wrongly, with their repositioning causing a sharp but often short pullback.
"You had people positioned for an environment of lots of central bank easing, low inflation and interest rates and importantly low volatility. Now they are having to shift to an environment that looks like you'll have less central bank easing, rising inflation, rising interest rates and rising volatility.
"In the short term, the economy and the markets can diverge like they have over the past few days, but in the intermediate term they move in tandem and I continue to believe the global economy will push higher and eventually pull the markets with it."
MICHAEL ANTONELLI, MANAGING DIRECTOR, INSTITUTIONAL SALES TRADING AT ROBERT W. BAIRD IN MILWAUKEE
"What we saw yesterday was the death of the short volatility trade. For the longest time, people had been shorting volatility. That trade started to crack on Friday because the market started to sell off. Yesterday the trade died because the market imploded.
"If this is just the implosion of shorting volatility, it's not the end of the bull market. People will be afraid now of shorting volatility. It'll change the complexion of the market. It takes away what many considered to be easy money."
WILLIE DELWICHE, INVESTMENT STRATEGIST AT ROBERT W. BAIRD IN MILWAUKEE
Its a lot of people trying to figure out what in the world is going on. How much of yesterday was program sells that got out of hand, how much of it was the VIX-related stuff and how much of it was maybe more meaningful. At this point it is still a sorting out kind of process.
"The choppiness this morning is trying to figure out where we should be. Some of what we saw yesterday suggests we are near at least a short-term low. Then the question is what the rallies look like after that. Given how fast weve come down, the expectation would be that we would be in for some violent rallies on the way up, but they would need to persist to gain some confidence that weve really worked through this. I dont see evidence of that just yet."
CHAD MORGANLANDER, PORTFOLIO MANAGER AT WASHINGTON CROSSING ADVISORS IN FLORHAM PARK, NEW JERSEY
Put your seatbelts on. Its going to be a volatile ride for the next several trading sessions.
Fundamentals are moving forward in a positive way, which gives us confidence that in the long run youll continue to see higher highs within the markets. But investors have to become a little bit more aware that long-term returns going forward are going to be lower than in the past several years.
GENE TANNUZZO, SENIOR PORTFOLIO MANAGER, COLUMBIA THREADNEEDLE, MINNEAPOLIS, MINNESOTA
Theres been a pretty swift rebound across a lot of measures. Certainly interest rates are clawing back quite a bit. If I look at the performance of credit, it has been clawing back a bit. With regards to high-yield and investment grade, weve noticed that liquid derivatives are moving with higher velocity than the cash market.
Bonds certainly opened this morning quoted lower and it seems like people are trying to put money to work. The amount by which bid offers widened is quickly evaporating. And so, are prices that different from Thursday or Friday of last week? Actually they are not."
(Compiled by Nick Zieminski in New York; Reporting by Chuck Mikolajczak, Kate Duguid, Shounak Dasgupta, Danilo Masoni, Sinead Carew, Lewis Krauskopf and April Joyner)