After recovering from those initial scary losses, the Dow is now down "only" about 450 points, or about 2.9%.
Global fears about China's economic slowdown shook stock markets around the world for a second week in a row. The wave of selling knocked the S&P 500 into correction mode for the first time since 2011.
To put the early losses into perspective, the Dow has never closed down more than 800 points in a single day. At one point it was on track for its worst percentage decline since the 2008 financial crisis.
"We have not seen this level of full-blown panic in markets for quite some time," said Peter Kenny, chief market strategist at Clear Pool Group, a financial technology firm.
It all started with Shanghai's 8.5% drop
The dramatic selling began overseas. China's Shanghai Composite plummeted 8.5%, wiping out all of its massive gains so far this year. Not only has an apparent bubble in Chinese equities popped, but the country's economy may be slowing much faster than feared.
Last week's big selloff gathered serious momentum after China said its manufacturing activity -- a critical metric on growth -- tumbled to a six-year low in July.
Fears of China contagion
China is the world's second-biggest economy. Its explosive growth in the last two decades has been the engine for the global economy. Its enormous appetite for raw materials like oil, copper and iron ore fueled global growth, especially in emerging markets like Brazil that are rich in natural resources.
But that story has been completely derailed by China's economic slowdown. Just how much China slows down matters greatly to investors.
All U.S. stock market indexes are in correction
Fears about the health of China's economy has ratcheted up to the point that the S&P 500, made up the largest U.S. companies, is now sitting in "correction" territory -- a 10% decline from a recent peak.
Both the Dow and Nasdaq fell into correction mode on Friday, the first since 2011.
But stocks are up about 200% since crisis
It's worth remembering that these steep losses come after a tremendous bull run for stocks.
The S&P 500 has skyrocketed 220% since bottoming out at 666 during the Great Recession in March 2009. At its lows on Monday, it was at 1,866.86.
Oil continues downward march too
Crude oil plunged below $39 a barrel on Monday for the first time since 2009. A global economic slowdown is eating into demand for oil at a time when supplies remain extremely elevated.
10-year yield below 2%
Another sign of fear: The 10-year Treasury yield slid below 2% on Monday. That's the lowest level since April and a sign that investors are fleeing to the relative safety of American government debt.
It also signals that Wall Street believes the Federal Reserve may have to delay its expected interest rate hike from September until later in the year or even 2016.
Will the bull market survive?
Ed Yardeni, president of Yardeni Research, believes the selloff has created an opportunity for investors "with the stomach to jump in."
"I think we'll see the markets make a comeback. The fundamentals of the U.S. economy remain good, especially compared with everybody else," Yardeni said.
That would mean the bull market that began more than six years ago will survive. The S&P 500 would need to close below 1,708 to be classified a bear market, which is defined as a 20% decline from a previous high. Currently, the S&P is at 1,921.
Bear market for Apple
Many of America's favorite stocks are now in "bear market" territory, including Disney, Tesla and even Apple.
Apple CEO Tim Cook sought to ease investor anxiety. Cook told CNBC that Apple has experienced "strong growth" in China over the last two months. He said iPhone activations have actually "accelerated" in recent weeks and China continues to represent "unprecedented opportunity over the long term."
Apple shares are down 1.2% on the day, but that's much better than the rest of the market.
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