NEW YORK — Another dramatic day on Wall Street: Stocks nosedived, then they soared.
The Dow plunged 567 points at the open on Tuesday and briefly sank into correction territory — a drop of 10 percent from its record high.
But those losses quickly vanished, and the index ended the day with a mirror-image gain of 567.
It was the Dow’s biggest point increase since August 2015 and the fourth-largest in history. The percentage gain of 2.3 percent is the biggest since January 2016.
The huge swing shows how volatile trading has become in what was once a calm and booming stock market.
“We had an extreme sell-off followed by an extreme bounce,” said Peter Kenny, an independent market strategist and founder of Kenny’s Commentary. “It was a massive reversal: Nearly 1,000 points on the Dow is mind-bending.”
After starting the day sharply lower, the S&P 500 closed with a 1.7 percent gain, its best since November 2016. Bespoke Investment Group said it was the biggest open-to-close rally since 2011.
The powerful comeback might reflect a realization by investors that the economy is still strong, even if stocks flew too close to the sun earlier this year.
“Sometimes the market does get disconnected from economic reality to the upside and it needs to get in line,” said Jack Ablin, chief investment officer at Harris Bank.
However, he said, “the fundamentals of the economy and credit markets remain sound.”
The stock market freakout of 2018 hit a crescendo on Monday when the Dow plunged a record 1,175 points. The 4.6 percent plunge was the index’s worst day since August 2011 and knocked it into the red for the year.
With Tuesday’s bounce, the Dow recovered about half the losses from the day before. It’s about 6 percent off its all-time high.