In a dramatic reversal to a morning rally, U.S. stocks relinquished all of their opening gains, and then some, to finish with sharp losses. The main indexes began trimming gains in afternoon trade, falling into negative territory ahead of the closing bell as selling accelerated in the final hour.

“We would have preferred stocks open flat and rally into the close. Today’s action is not a good news for those who were expecting a V-shaped recovery,” said Michael Antonelli, equity sales trader at R.W Baird & Co.

“Unlike the pullback last October, this correction has a serious tone to it — there are serious global growth issues that are not going to be resolved any time soon. We expect the correction to last longer,” Antonelli added.

Trading on Wall Street remained volatile, with the CBOE Volatility index VIX, +0.28% , otherwise known as the Wall Street’s fear gauge, trading at 36, the highest level since 2011.

Get use to it! Volatility is here to stay after China

The S&P 500 SPX, -1.15% , turned big gains into losses and closed down 25.59 points, or 1.4%, at 1,867.61. Utilities and telecoms saw the biggest losses. The benchmark index is firmly in correction territory, having fallen 12% from its peak reached on May 21. On a percentage basis, Tuesday’s move marked the largest swing in the index, before closing negative, since October 2008 during the financial crisis.

The Dow Jones Industrial Average DJIA, -1.84% which at session highs was up more than 400 points, ended with a loss of 204.91 points, or 1.3%, at 15,666.44.

The Nasdaq Composite COMP, -0.13% ended the day down 19.76 points, or 0.4% at 4,506.49.

“The kind of volatility we saw over the past week is normal historically. This is what risk premium means,” said Colleen Supran, a principal at San Francisco-based Bingham, Osborn & Scarborough.

“We don’t know whether the correction is over or not, but usually when volatility picks up, it gains momentum,” Supran said.

Read: Jeffrey Gundlach says stocks have further to fall

Before the market open, futures for all three benchmarks were already trading firmly higher early in the morning, but extended those gains as the People’s Bank of China cut its benchmark interest rate and reduced its reserve requirement ratio by 0.5 percentage point.

The PBOC injected 150 billion yuan ($23.40 billion) into the financial system to ease selling pressure on the country’s stock market. The central bank’s interest-rate move came after Asian markets had closed. Meanwhile, China’s Shanghai Composite Index SHCOMP, -1.28% closed 7.6% lower at 2,964.97 on Tuesday.

“We would be cautions to avoid any big moves, either selling or buying at this stage,” Supran added.

Read: The corporate bond market foreshadowed a stock-market rout

Economists at Goldman Sachs, however, warned not to panic too much over the weaker Chinese growth outlook and instead use the current market jitters to look for new investments.

“Ultimately, the risks are mainly in China itself, and it is the overstated fear of the risk to global growth coming from China, and lack of confidence in its potential policy support, that we believe will create investment opportunities and a likely overshoot in valuations,” they said in a note dated Aug. 24.

Other markets: European stock markets also recouped some of their losses, with the Stoxx Europe 600 index SXXP, +0.69% jumping 4.2%.

Crude-oil futures CLV25, climbed back above $39 a barrel, rising 2.8%, to settle at $39.31 a barrel.

Gold US:GCZ5 eased, settling 1.3% lower at $1,138.30 an ounce, while the dollar DXY, +0.04% traded mostly higher against other major currencies.

Tuesday’s data:U.S. house prices rose 1% in June, reflecting an uptick in sales and a low supply of properties for sale, according to the S&P Case-Shiller 20-city composite index. Sales of new single-family homes rebounded in July after a sharp decline in June, the Commerce Department reported Tuesday.

Meanwhile, consumer confidence rose in August to the highest level since January and the second highest level since the end of the recession.

Movers and shakers: Shares of Best Buy Co Inc. BBY, +0.36% rallied 12.6% after the electronics retailer reported fiscal second-quarter profit and sales that rose well above expectations.

Shares of Netflix Inc. NFLX, +3.70% climbed 4.8%, rebounding after the online-streaming service on Monday entered bear market territory and closed down 6.8%.

Apple Inc. AAPL, +3.03% shares rallied as much as 4.8%, but closed 0.6% higher.

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