The Dow was off a heart-stopping 1,600 points during afternoon trading, the largest intraday point decline in the blue-chip index's history. But the 4.6 percent loss for the day was not even close to the biggest.
The downdraft raised fresh anxieties among Americans who have seen their retirement savings and household worth march steadily higher without any of the gyrations that are part of a normal market cycle.
It also threatened to deprive President Trump and the GOP of a favorite talking point at the nascent stages of the 2018 midterm campaign.
Although the declines were eye-catching, market observers have been anticipating a correction after a year of big gains in the Dow, the broader Standard & Poor's 500-stock index and the tech-heavy Nasdaq.
"This was crowd psychology at its best," said Daniel Wiener, chief executive of Adviser Investments. "Investors had the weekend to worry about what happened Friday, and they sold on Monday. This is normal, every day stock market volatility. And it's healthy."
Asian stocks tumbled Tuesday morning, tracking a volatile day in Monday's U.S. trading.
Japan's Nikkei stock average dropped more than 6 percent in early afternoon trading, after falling 2.5 percent a day earlier. Hong Kong's Hang Seng Index sank nearly 4 percent, as markets in Australia, Korea and China also fell.
Many analysts pointed to a seemingly unusual cause for the turbulence: rising wages.
The Labor Department reported Friday that wages had gone up by 2.9 percent in January, compared with a year earlier. That was the fastest growth in almost a decade, evidence that the extraordinarily low unemployment rate was forcing employers to pay higher wages.
"The employment report on Friday showed wages are growing at the fastest rate since the recession," says Torsten Slok, chief international economist at Deutsche Bank. "Investors are waking up to the fact that we won't have low interest rates forever."
For years, Americans have been hungry for more pay. Politicians, including Trump, campaigned on giving U.S. workers raises. Yet, the first sign that wages might finally be going up, even slightly, set off Wall Street. On a basic level, investors worry that higher pay means lower profits for shareholders, but there's an even deeper concern.
The heart of the stock market sell-off is about inflation. More specifically, it's a fear that wages and prices are going to rise faster than expected, and the Federal Reserve is going to fumble its attempts to keep inflation in check.
"The Fed has been predicting inflation and interest rates would go up since 2013," Slok said. "It felt like a boy-who-cried-wolf situation, but now it's finally happening."
Moderate inflation is a healthy component of an economy. But markets may fear inflation could quickly grow overheated. Should that happen or even appear to be a real risk, the Federal Reserve would probably raise interest rates, a move that could dramatically slow the economy or even cause a recession.
"There is not a high chance of a recession," Slok said. "There is a high chance of the economy overheating. The market is reacting to good news, not bad news."
There was also focus on the 10-year Treasury bond, a closely watched harbinger of investor sentiment. The yield's rise toward 3 percent is widely believed to be a marker for investors to eschew equities for the stability of bonds.
Bond yields are rising as the Federal Reserve trims its U.S. bond holdings. The U.S. Treasury is also having to borrow more money, partly because of the tax cuts, and issuing more debt tends to raise yields.
The S&P 500 in January saw its 10th consecutive monthly gain, the longest streak in 59 years. The stock market has lost $1 trillion in value in the first five days of February.
The market may end up in an official correction, a 10 percent drop from the last peak. There have been only four corrections in this long bull market, and this would be the fifth. But Ed Yardeni, head of Yardeni Research, notes that this bull market has had 60 "panic attacks," where there's a dip that gets everyone buzzing, even though it doesn't turn out to be a full correction.
"You can't make too much out of a couple of days of craziness," Yardeni said.
"It's not all that complicated," said Jared Bernstein, an economist at the Center on Budget and Policy Priorities. "The market got spooked by a jobs report suggesting wage growth had accelerated."
While the economy has hummed along, wage growth has stubbornly lagged behind. Even 2.9 percent is well below historic norms.
"Folks are overreacting," Bernstein said. "Working people are due for some wage growth. And that's a good thing, not a bad thing."
These new concerns about rising inflation come after years of worry by U.S. officials about too little inflation. Since the Great Recession, inflation has yet to hit the Fed's 2 percent-a-year goal. The latest read on inflation, 1.7 percent, is still fairly anemic, according to data out last week. But Wall Street is forward looking.
Investors have already priced in a bounce from the tax cuts and Trump's regulatory rollback. Now Wall Street is trying to price in the risk of a troubling scenario unfolding later this year or next. It is also reacting to the fact that U.S. stocks have shot up 26 percent in the past year, more than three times the typical annual return of 8 percent.
"The data is good, the psychology is poor," said Michael Block, chief strategist at Rhino Trading.
This sell-off is actually occurring when company after company has been reporting record profits: About 80 percent of companies have beaten expectations on earnings so far, according to JPMorgan Chase.
Another factor that might have investors finally pricing in more risk is the rising federal deficit.
On Wednesday, The Treasury released data showing that the government is on track to borrow nearly $1 trillion this year, an 84 percent increase from last year. That kind of spike in borrowing helped push government bond yields to levels last seen four years ago. Those headlines started to cause angst among investors who had largely ignored any bad news about the debt.
The change of leadership at the Fed brings another sort of uncertainty. While new Fed Chair Jerome H. Powell is widely expected to follow Janet L. Yellen's lead and move interest rates up slowly, he's still a relatively unknown quantity for the markets. The Fed is also operating with just three of its seven governor seats filled. Trump has yet to nominate a vice chair of the Fed. Some worry that Trump could fill the remaining board seats with conservative-leaning economists, and that Powell will aggressively go after inflation by quickly raising interest rates.
The market's tumult may hold another sort of message.
As Yardeni put it: "I think the market is sending a signal to the Fed and Powell not to change course in any radical fashion."
Emily Rauhala in Beijing contributed to this report.