A fall of more than 10 per cent or more from a high is what traders class as a correction, while a decline of 20 per cent or more is often termed a bear market.
Wall Street lost steam in afternoon trade, after U.S. 10-year Treasury yields rebounded to 2.836 per cent (their highest levels in four years).
While those concerns have been the catalyst for recent selling, the retreat in equities had been long awaited by investors as the market climbed nearly steadily to record highs earlier this year.
As big as the Dow's drop seems to be, it has only taken the Dow back down to levels that it first hit in November.
"Markets are down again today, maybe unnerved by fears that the U.S. Senate will not pass a budget bill in time to avoid a U.S. government shutdown", said Rob Carnell of ING in a report.
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Stocks in Europe declined and bond yields increased after the Bank of England said could raise interest rates in coming months because of the strong global economy.
This week has been a week that United States stock markets will be glad to see the back of.
Continue to monitor Treasury yields since they are controlling the price action.
The broader S&P 500 fell 3.8pc, also ranking as a correction. All 30 of the blue-chip Dow industrial components finished negative. The Nasdaq was down 10 points, or 0.2 percent, to 6,765. Several Dow members lost more than five percent, including American Express and Home Depot.
The Standard & Poor's 500, the benchmark for many index funds, is also 10 percent below the record high it set two weeks ago. The data sparked worry among experts, many of them expressing concern about a potential rise in inflation and interest rates.
Some say the fluctuations are because of the good news, with fears that an overheated economy and nascent inflation will push the Federal Reserve to raise rates. "You're seeing real changes occur and different investments are adjusting to that", O'Rourke said.
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However, those relatively small percentage movements overnight were closer to what markets expected, compared to the Dow's 4.6 per cent (1,175 point) drop earlier this week. That makes it the worst week for the indexes since January 2016.
Thursday's markets reflected the recent craziness in stocks. The Nasdaq Composite Index tumbled 274.82 points, or 3.90 percent, to 6,777.16.
Trader Michael Milano, right, works on the floor of the New York Stock Exchange, Thursday, Feb. 8, 2018.
"I think what we have moved into now is actually more investors taking more defensive approach to the market just purely as a reaction to the sharp price drop that we have had", added Lawler.
That's because the stock market as measured by the S&P 500 index has to fall more to trigger those halts. Fundamentals remain solid in the USA with the labour market tightening, earnings and inflationary pressure expected to pick up. "There's kind of an emotional reversal that's going on".
The Australian share market suffered more losses worth $20 billion on Friday after a night of carnage took USA markets into official correction territory.
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Investors breathed a sigh of relief when the S&P 500 dipped below and then bounced sharply above a crucial level of support known as the 200-day moving average.