International markets have continued to plummet amid fears of a global economic slowdown.
The US stock exhange had shown signs of improvement earlier on Friday, but gains quickly retracted.
The Dow Jones ended down 1.57 per cent, while the Nasdaq dropped 1.62 per cent. The S&P 500 was down 1.50 per cent.
Earlier, European markets also fell, London's FTSE-100 closed down 1.01 per cent and Germany's Dax lost 2.19 per cent. France's Cac fell 1.92 per cent.
Global investors fear major economies may be heading back into recession after a raft of gloomy US economic data, and are concerned by an apparent failure by policymakers to offer solutions for the eurozone debt crisis.
Gold rises as Asian markets slide
Richard Milne from the London-based Financial Times told Al Jazeera the chances of a global recession are increasing. He added that the volatile market behavior could mean things will get worse before they get better.
"The biggest worry I hear from investors is that they fear a Japan-style economic effect could happen, where the markets could lose a decade or even two decades before things get better," said Milne.
Lothar Mentel, chief investment officer at Octopus Investments, said: "Some stocks have been driven down to ridiculous levels.
"There has been a panic about European banks. European governments are guaranteeing European banks, but if the governments are not stable themselves, that means the banks aren't stable."
Earlier, Asian markets also closed down, with Japan's Nikkei losing 2.45 per cent and Hong Kong's Hang Seng down 3.01 per cent.
South Korea's Kospi fell by 6.2 per cent, posting its worst daily percentage loss since the global financial crisis in late 2008.
Oil prices fell as investors speculated that slower global growth would dent demand for crude.
So-called safe haven investments continued to rise, with the spot price of gold hitting a new record high of $1833.81 an ounce.
The Swiss franc rose against the euro, despite recent attempts by the Swiss authorities to weaken it earlier this month.
Source: Al Jazeera and agencies