Dow jumps 100 points as stocks try to recover from steep sell-off

U.S. stocks erased earlier losses on Tuesday as the major indexes tried to recover from a recent steep sell-off.

The Dow Jones industrial average gained 150 points after falling more than 500 points at the open. The 30-stock index also dipped into correction territory earlier in the session.

The S&P 500 rose 0.2 percent with information technology as the best-performing sector. The Nasdaq composite also rose 0.4 percent.

The major indexes opened sharply lower before regaining their footing.

Global markets fell sharply. The German Dax dropped 1.9 percent, while the French CAC 40 also fell 1.9 percent. In Asia, the Japanese Nikkei 225 plunged 4.7 percent, while the Shanghai composite pulled back 3.4 percent.

On Monday, the Dow dropped 1,175.21 points, having briefly declined more than 1,500 points during the session. Other major indexes closed sharply lower. The sell-off kicked into action on Friday, after the latest nonfarm payrolls report saw interest rates in the U.S. jump.

This pullback came after a rip-roaring start to the year for stocks. The Dow and S&P 500 notched all-time highs as well as sharp gains for January.

"Widespread and excessive optimism left stocks vulnerable to increased volatility as bond yields have moved off their lows," said Bruce Bittles, chief investment strategist at Baird. "While there is some early evidence that selling pressures are becoming exhausted, and stocks could soon see relief, the broad market is seeing meaningful deterioration."

While there was no particular piece of news that pushed major U.S. indexes deep into the red on Monday, the recent moves in the bond market have added volatility and concern to the market.
The benchmark 10-year yield traded around 2.74 percent on Tuesday; it began the year trading near 2.4 percent.

The Cboe Volatility index — widely considered the best fear gauge on Wall Street — surged 31.9 percent to 49.21. It closed at 37.32 on Monday. The surge in volatility also triggered massive selling in other volatility instruments.

—CNBC's Patti Domm contributed to this report

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