For the second time this week, the Dow plunged more than 1,000 points.
And it's now in a correction -- 10% off its record high just two weeks ago.
Fears about the bond market, inflation and interest rates seized investors again Thursday and drove the Dow, the S&P 500 and the Nasdaq all into the red for the year.
The Dow finished with a decline of 1,033 points, the second-worst in history, eclipsed only by Monday's 1,175-point plunge.
The percentage decline on Thursday, 4.2%, wasn't nearly as bad as the scary days of the 2008 financial crisis. But a stock market accustomed to a steady climb for more than a year and half as given way to two weeks of shaky selling.
"This is not the end of the world, but it is uncomfortable," said Rich Guerrini, CEO of PNC Investments.
The 10-year Treasury yield briefly hit a four-year high of 2.88%, renewing concerns about inflation and higher interest rates.
"The bond market has definitely got the stock market's attention," said Ryan Detrick, senior market strategist at LPL Financial. "Is the bond market telling us something we don't know? Is there more inflation down the road than we're expecting?"
The latest round of selling knocked the Dow and S&P 500 back into the red for the year. All of the Nasdaq's gains for 2018 were also wiped out.
Wall Street has failed to stage a lasting rebound from Monday, when fears about the bond market sent the Dow plunging a record 1,175 points.
Trading has been extremely choppy, and the market has swung in wide ranges -- up and down nearly 2,300 points over the past week. Consider this: The S&P 500 has risen or fallen 1% five times in the past two weeks. That only happened eight times all of last year, the fewest since 1964, according to LPL.
The VIX, a measure of market volatility, jumped 15% on Thursday.
"A big down day like Monday doesn't just go away. We're going to continue to see volatile days," said JJ Kinahan, chief market strategist at TD Ameritrade. "It can take two to three weeks to work through the system."
It's a big shift from 2017 and the beginning of 2018, when the stock market went the longest period ever without tumbling. But such calm is unusual, and stocks overheated.
"We had an epic run. There was euphoria because there hadn't been a pullback," said Jeffrey Schulze, investment strategist at ClearBridge Investments.
Bonds are spooking stocks
The yield on the 10-year Treasury bond ticked higher again on Thursday morning, to 2.88%. (A flight to safety away from stocks and back into government bonds knocked the 10-year back down to 2.82% by early afternoon.)
"We haven't seen interest rates rise like this in a long time," Guerrini said. "Obviously people are reacting."
The bull market has feasted on extremely low bond rates. The fear is that Treasury yields will rise to levels that make stocks less attractive and force the Federal Reserve to fight inflation by aggressively raising interest rates.
New York Federal Reserve President Bill Dudley told Bloomberg News on Thursday that if the U.S. economy keeps getting stronger the central bank may be justified in raising rates four times this year. Wall Street has been expecting three rate hikes at most.
Dudley, who called the market slump "small potatoes," said the "jury is still out" on the number of rate hikes.
Washington is putting more pressure on rates. The U.S. Senate reached a bipartisan deal Wednesday that would boost spending limits by $300 billion over the next two years. The compromise, coupled with Republican tax cuts, could lift the federal budget deficit to $1.07 trillion in fiscal 2019, according to Bank of America estimates.
Wall Street anticipates that more government spending will force the Treasury Department to borrow more money by selling additional bonds. To drum up demand for that higher supply, rates may have to go up.
Bank of America analysts warned that the Senate agreement will contribute to "higher rates" and raise "risks for tighter overall financial conditions."
These bond market worries briefly sent the Dow into a correction earlier this week, a 10% decline from recent highs. The fragile rebound lifted the market a bit, and the Dow and S&P 500 are now about 8% off their from all-time highs. Neither index has closed in a correction in two years.
The stock market is still up dramatically since President Trump's election. His promises for big corporate tax cuts helped lift the Dow more than 8,000 points, though it has since given back about a fifth of that surge.
The market performance also reflects the strong U.S. and global economies, which have boosted corporate profits. The job market remains healthy, as evidenced by a report Thursday that applications for unemployment benefits are at a 45-year low.
"The U.S. economy is on solid foundation," said ClearBridge's Schulze.
--CNNMoney's Donna Borak contributed to this report.