Financials stocks were hit hardest as the FTSE plunged to around 7,120 points, although it has rebounded a little since and it now trading around 7,204 at 9.20am, a loss of 1.8% on the day.
The Dow's biggest point loss until now was a 777-point drop in the global economic crisis of September 2008. At 4.6 percent, the decline was not the largest ever as a share of the total, though the Dow is down 8 percent-2,100 points total-in the last six days of trading.
The Standard & Poor's 500 index, the benchmark most professional investors and many index funds use, sank 4.1 percent, to 2,648.94. The Nasdaq composite fell 181 points, or 2.5%, to 7,059.
In a foreboding sign for the mining-heavy FTSE 100, the Australian Stock Exchange's ASX 200 index saw a 3.3 per cent fall, driven by big falls in energy and industrials stocks.
The S&P 500 has fallen 7.8 percent since January 26, when it set its latest record high.
"We had gone too far too fast in the month of January, and a little brush fire like this is not a bad thing", Philip Blancato, CEO of Ladenburg Thalmann Asset Management in NY. It started the year at 2.43 per cent.More news: State of Emergency was Declared in the Maldives
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The recent market volatility complicates Trump's message, however, and serves as a reminder of the riskiness of touting stock prices that can rise - or fall - in a matter of hours.
Amid the market plunge on Monday, websites for several large money management companies suffered slowdowns or crashes.
Put simply, if United States risk free rates (cash, short term debt, benchmark US-10 year treasuries) move higher then investors will value risk assets (equities) lower in compensation for the fact that the return on risk free assets is rising.
"The difference between this year and last year is we're going to see more periods of volatility like this as the market reacts to higher inflation", he said.
The Dow Jones industrial average plunged as much as 1,500 points, erasing its gain for the year, as the market extends a slump that began Friday. After all, with unemployment numbers being so low and new significant (corporate) tax cuts being implemented by the Trump administration and Congress, current markets have a lot to lose. A weaker dollar and stronger yen tend to hurt prices of export-oriented manufacturers in Japan.
"A return to monetary policy normalcy (in the US and the Eurozone) means higher yields (compared to the past few years) and more volatility", DBS said in a note.
Shares are tumbling in Asia after a wild day for US markets that resulted in the biggest drop in the Dow Jones industrial average in six and a half years. Gold, for example, was up 0.5 per cent at $1,343 an ounce.
The stock market has been unusually calm for more than a year.
Stocks in Europe also fell. Taiwan shares lost 5.0 percent, its biggest since in 2011 and Hong Kong's Hang Seng Index dropped 4.2 percent.