Stocks dropped sharply Thursday morning as the Dow Jones Industrial Average lost 500 points early in the day just one day after a historic rally.

By the closing bell, however, the market had recovered and finished up 260 points.

The Dow, Nasdaq composite and S&P 500 were down roughly 2 percent by 10:25 a.m. Thursday, a day after stocks surged to erase some of the recent record losses. All three rallied late to finish in the black for the day.

The Dow gained a record-high 1,086 points Wednesday and the S&P rose 5 percent to escape from a bear market.

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Traders have been hesitant due to deepening fears of a possible recession, rising interest rates, the mounting costs of the U.S.-China trade war and reports that Trump has considered firing Fed Chairman Jerome Powell.

The Dow suffered its worst Christmas Eve losses Monday as Trump called the Fed “the only problem our economy has” and claimed on Twitter that bank officials “don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders.”

Wall Street was also rattled Monday after Treasury Secretary Steven Mnuchin Steven Terner MnuchinOn The Money: Anxious Democrats push for vote on COVID-19 aid | Pelosi, Mnuchin ready to restart talks | Weekly jobless claims increase | Senate treads close to shutdown deadline Vulnerable Democrats tell Pelosi COVID-19 compromise 'essential' Pelosi asks panels to draft new COVID-19 relief measure MORE sought to reassure financial markets after steep stock losses the previous week.

Mnuchin announced Sunday afternoon that he had spoken to the heads of the six largest U.S. banks and said there was no reason to expect a credit crunch or market meltdown. While the Treasury secretary sought to settle fears of a crisis, his statement alarmed traders and analysts, who have not seen signs of a broader financial panic.

Stocks erased much of their Monday losses on Wednesday, the first day of trading after Christmas. Reports of record levels of holiday spending from MasterCard and Amazon helped spur a massive rally.

Updated at 4:30 p.m.