The S&P 500 lost 14 points (0.7 percent) to end at 1,867 after recovering from its lowest level, 1,812.22, since February 2014. The worst performing sector during the day was the energy industry, which fell 4.4 percent, meaning a loss of 14.7 percent since the start of 2016.

The Nasdaq closed at 4,471.69, a drop of just 0.1 percent, after beating back a 145-point loss during the day to end up down just 5.26 points.

The early sell-offs were triggered by record-low oil prices dropping by a further 4 percent, sinking below $27 per barrel, its lowest price since September 2003. Crude oil has become so cheap after the lifting of UN sanctions against Iran because investors expect Iran's oil exports to add to the current supply glut.

Lower prices for goods may be helpful for some businesses and individuals, but if a drop in overall demand is another factor in prices dropping, then investments will be negatively impacted, further slowing the economy.