Dow closes more than 550 points higher after crazy market swings

After two huge sell-offs in a row, U.S. stocks were all over the map on Tuesday. Investors blamed the wild moves on a combination of interest-rate fears, computer-driven trading and the obscure volatility funds that use leverage.

The Dow Jones industrial average opened with a big whoosh lower, then rallied all the way back. The Dow closed 569 points higher and rose as much as 600.48 points. At its session low it was down by 567 points. It traded in a range of 1,167.49 points.

The S&P 500 is 1.8 percent higher with tech as the best-performing sector. The Nasdaq composite gained 2.1 percent.

"I thought we were going to see the bottom within five minutes of when we opened. I think that's basically what we're seeing," said Ed Keon, portfolio manager at QMA, the quantitative and dynamic asset allocation business of PGIM. "At these levels, stocks represent pretty good value and we're adding to equity exposure." Keon said it's too early to call a bottom but he expects that the worse is over.

The Cboe Volatility index — widely considered the best fear gauge on Wall Street — broke above 50 in early trading Tuesday before sliding down to 30.12. It closed at 37.32 on Monday. The surge in volatility also triggered massive selling in other volatility instruments.

Source: Bloomberg Pro Terminal

Jr Trader Alexander Kumanov

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