U.S. stocks plunged in the last hour of trading Tuesday to wipe out a day-long rally, adding fresh uncertainty to markets that had seemed to be on the rebound.

The wild swing highlighted investors’ anxieties about an expansive Chinese slowdown and hinted at fault lines in a U.S. economy otherwise considered strong.

The surprising setback dropped the Dow Jones industrial average more than 650 points from its midday peak, its biggest reversal since 2008, and pushed the index of 30 blue-chip stocks down 204 points, or about 1 percent, to 15,666.44.

Investors had spent most of the day climbing back from a dismal Monday and from several days of carnage in Chinese stock markets. China’s central bank on Tuesday cut interest rates in a bid to stimulate the country’s economy, and for a while, that appeared to reassure European and U.S. markets.

But by late afternoon, Wall Street went back into selling mode, as lingering fears about a slowdown in the global economy undercut the brief surge of confidence.


“We all looked at each other and said, ‘Huh?’ If you didn’t look in the last 30 minutes, you missed it,” said Meg Green, the chief executive of Meg Green & Associates, a Miami wealth-management firm that handles more than $750 million in assets.

She guessed that the late turnaround came from either pre-programmed trading or “a lot of people who looked at the markets and said, ‘You know what? I’m going to take my bounce profits and go home.’ ”

The selloff extended a six-day losing streak and suggested more turmoil to come.

“Volatility will remain elevated here in the coming weeks,” said Adam Burch, a market investment director for U.S. Trust. “People have become emotionally engaged and aren’t looking objectively at the market.”

Both the Standard & Poor’s 500-stock index, a broader sample of the market, and the Nasdaq composite, an index dense with tech stocks, slid about 1 percent. All Dow stocks pocketed solid gains in the morning, but the index ended the day at an 18-month low.

The earlier rally had been fueled not only by interest-rate cuts in China, but also by promising news at home, including new data that showed boosts in new-home sales and improving consumer confidence.

But the depth of China’s troubles weighed on U.S. traders. Authorities in China appeared powerless Tuesday to prevent a further slide in the nation’s ailing market, as China’s main share index plunged for a fourth day in a row.

The main Shanghai share index opened Tuesday more than 6 percent lower and reached an eight-month low. A slight recovery was not sustained, and it ended 7.6 percent down.

“At the moment, there’s panic in the market because we have lots of retail investors,” said Wei Wei, an analyst at Huaxi Securities in Shanghai. “We’ve never experienced anything like this in China’s stock market, the speed of the decline and the scale of it.”

China’s markets opened fractionally up on Wednesday, but quickly dipped again, losing a couple of percentage points each in early trading, as investors weighed whether the central bank moves would be enough to stop the slide.

The Shanghai Composite Index opened up 0.52 percent, and the Shenzhen Composite Index opened at 0.28 percent, then dropped more than 2 percent each.

Global markets have lost trillions of dollars in market value over the past few weeks, erasing gains for the year and stoking fears of a deepening rout.

Europe’s main markets climbed sharply Tuesday, while markets in Hong Kong, South Korea, Australia and Singapore posted modest gains. Tokyo’s Nikkei 225 index closed nearly 4 percent down.

Oil prices stayed close to a six-year low, even as U.S. light crude rose slightly to just below $40 a barrel. Global oil prices have slumped because of concerns about a manufacturing and construction slowdown in China and an international oil glut.

The turn in U.S. markets could further affect how the Federal Reserve schedules its expected increase in interest rates, which have plunged to record lows but could be lifted as early as next month.

Yields for U.S. Treasury bonds, considered havens during market upheavals, dipped again Tuesday, a signal that investors were moving back to low-risk investments after braving the broader markets.

The late loss of stability in markets roiled companies in every sector, including the giants of American tech. Shares in Apple, the world’s most valuable company, jumped more than 5 percent in early trading before dwindling to a tiny gain, one day after chief executive Tim Cook reassured investors in hopes of curbing the firm’s billions of dollars in market losses.

Amid the economic turbulence, President Obama’s national security adviser, Susan E. Rice, will visit Beijing this weekend to meet with senior Chinese officials and “consult on a range of bilateral, regional and global issues,” the White House announced Tuesday.

During her talks Friday and Saturday, Rice will underscore the U.S. commitment to “building a more productive relationship” and discuss “areas of difference” ahead of a state visit by President Xi Jinping to Washington next month, National Security Council spokesman Ned Price said in a statement.

When the Chinese market started its drop Tuesday, authorities unleashed a series of measures to try to stop the slide, establishing a $400 billion fund to buy stocks, ordering state-owned companies to buy shares, banning large shareholders from selling and even launching criminal investigations into short sellers.

The People’s Bank of China cut its one-year benchmark lending rate by a quarter of a percentage point to 4.6 percent and its one-year deposit rate by the same amount to 1.75 percent.

“The main goal of cutting rates is to support the healthy development of the real economy,” the bank said in a statement.

It also moved to increase liquidity by lowering the minimum reserves that banks are required to hold by half a percentage point, effective Sept. 6.

But experts said the moves were unlikely to be enough to rescue the stock market.

“Even though it’s a positive signal for the stock market, it won’t change anything,” said Wu Xianfeng, president of Longteng Asset Management in Shenzhen. “The move is far from being enough to erase the market’s panic.”

Denyer reported from Beijing. William Branigin in Washington and Xu Jing and Xu Yangjingjing in Beijing contributed to this report.

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