US markets staged a comeback in the last hour of trading on 26 January, with the Dow Jones Industrial Average falling 249 points, or 1.55%. The Dow was down as many as 566 points earlier in the day.
The S&P 500 closed down 22 points, or 1.19% while the Nasdaq lost 5 points, or .11%, after slumping nearly 4% earlier in the session. Eight stocks in the S&P 500 fell more than 9%.
Earlier in the session, US equity markets moved higher as oil prices staged a timid rebound after plunging below the $30 (£21) a barrel threshold, while investors awaited Apple's earnings later in the session.
Shortly before the opening bell, the Dow Jones Industrial Average was up 0.76% to 16,005.75 while the S&P 500 and the Nasdaq were 0.71% and 0.51% respectively.
Oil prices plunged amid ongoing concerns over a global oversupply and fresh anxiety over a slowdown in China before recouping some of the losses, as Brent crude gained 1.45% to $30.95 a barrel, while West Texas Intermediate rose 1.43% to $30.78 a barrel.
"Despite the rally towards the back end of last week, there is clearly still a desire to push prices back to their lows and it will be interesting to see how successful they are today," said Oanda's senior market analyst Craig Erlam.
"Yesterday's sell-off was not overly convincing and suggests a broader correction may be on the cards and the fact that we've seen buying into today's weakness could further support this view."
Elsewhere, Asian stocks were dragged lower from the fall in oil prices, as the Shanghai Composite Index tumbled 6.42% to close below the 2,800 for the first time since December 2014, while European stocks recouped some earlier losses and edged slightly higher.
Midway through the afternoon, London's FTSE 100 was broadly flat, while Germany's Dax and France's CAC 40 were 0.29% and 0.32% higher and the Pan European Stoxx 600 was up 0.19%.
On the macroeconomic front, the S&P/Case-Shiller 20-City Composite Index showed house prices rose 0.1% in the quarter to the end November, marking a 5.8% yearly increase, its biggest annual gain since July 2014, while a January figure for consumer confidence is expected at 10am EST (3pm GMT).
Investors will also closely monitor the beginning of a two-day Federal Reserve meeting, the first meeting since the US central bank raised interest rates for the first time in December 2015.
"Last month's long anticipated rate increase, served to push the US dollar back towards its recent highs," said Michael Hewson, chief market analyst at CMC Markets.
"Unfortunately for the Fed this appears to have largely been a problem of their own making with their expectations management somewhat lacking in the weeks since that meeting, as markets look to price in another three to four rate rises in 2016."
Among the companies that reported ahead of the bell, DuPont was on the front foot even though its quarterly revenue missed expectations, while Johnson & Johnson and Coach rose after posting profit that topped estimates, even though revenue fell short.
One of the highlights of the current earnings season arrives after the closing bell, with iPhone maker Apple scheduled to report.