Stocks clawed their way back from session lows, though remained deep in the red on Thursday afternoon as many investors grew skeptical that global central banks can rein in rampant volatility and soothe financial markets.
The S&P 500 was down 1.2%, and the Nasdaq slid 0.49%. The Dow Jones Industrial Average fell 1.6%, or 240 points, bouncing from a 400-point loss earlier in the session.
The U.S. central bank was in the spotlight after Federal Reserve Chair Janet Yellen conceded there is chance of recession in any year, though didn't make a judgement on whether the U.S. economy is headed that way. Yellen told the Senate banking committee the Fed will make an assessment of the economy at its March meeting.
Overseas, Sweden's central bank cut its main interest rate further below zero, an aggressive move that spooked European investors worried over the extent of a financial downturn. Meanwhile, the safe-haven yen saw its strongest gains since the downfall of Lehman Brothers in 2008, undercutting the Bank of Japan's late-January efforts to tamp down currency inflation by turning interest rates negative.
"Central banks are getting desperate, moving to counter one another at each turn it seems," said Christopher Vecchio, currency analyst at DailyDX. "Volatility across asset classes seems almost guaranteed to stay for the foreseeable future."
Financials stocks were the heaviest hit in the selloff Thursday. Banks such as JPMorgan (JPM) , Citigroup (C) , Goldman Sachs (GS) and Bank of America (BAC) were sharply lower, while the Financial Select Sector SPDR ETF (XLF) slid 3.1%.