"The U.S. stock market is in a mode of uncertainty, at best," DoubleLine Capital's co-founder Jeffrey Gundlach told Reuters. "You don't correct all of this in three days." 

After opening with an historic 1,000-point drop on Monday, the Dow Jones Industrial Average swung wildly throughout the session before closing down 3.6% or 584 points. The S&P 500officially entered correction territory, falling 11% from its May peak, after dropping more than 3.9% over the session. The S&P 500 and Dow are on track for their worst month since February 2009.

Volatility peaked over the session on the huge moves on benchmark indexes. The Volatility Index, otherwise known as the 'fear index', rocketed 47% higher to 41.14.

High-momentum tech stocks pulled the Nasdaq 3.8% lower. Major losers included Apple , Netflix , Amazon , Google , Facebook , and Twitter .

The selloff was fueled by 8.5% plunge in Chinese stocks Monday, which was quickly dubbed 'Black Monday.' The drop was its biggest one-day percentage decline since early 2007, pushing the index into negative territory for 2015. The index crumbled more than 10% last week after manufacturing data reinforced fears the world's second-largest economy was undergoing a significant slowdown.

But some economists, and investors, believe the selloff was overdone.

"The current panic is essentially 'made in China.' The recent data from other major economies have generally been good and there is little to justify fears of a major global downturn," Capital Economics analysts wrote in a note. "Worries about the economic fallout from the slump in Chinese equities are overdone -- even in respect of the impact on China itself. What's more, the recent slump has simply taken the Shanghai composite index back to where it was earlier in the year."

World markets fell in-step with China's stock market. European markets such as Germany's DAX, France's CAC 40, and the FTSE 100 in London plummeted more than 4%, while Japan's Nikkei fell 4.6% and the Hang Seng slid 5.2%.

Global volatility could give the Federal Reserve pause in deciding when to raise interest rates from crises levels, according to Barclays analysts. The investment firm pushed out its forecast for the first hike from September 2015 to March 2016, though a December hike would be possible if volatility proves transitory.

"We believe the FOMC will delay the start of the rate hike cycle beyond September as a means to offset tighter financial conditions while it evaluates the effect of recent volatility," Barclays analysts wrote in a note. "In addition to worsening financial market conditions, our decision to delay our outlook for the tightening cycle stems from the effects of a stronger U.S. dollar, lower oil prices, and weak global demand on our outlook for US inflation."

The energy sector led markets lower on Monday as crude oil closed below $39 a barrel for the first time since 2009. Crude oil plummeted to its lowest level in six-and-a-half years on fears a slowdown in China would hurt demand while the Organization of Petroleum Exporting Countries continued to pump out supply at record highs. West Texas Intermediate crude was down 5.5% to $38.24 a barrel.

Exxon Mobil , Chevron , Schlumberger , ConocoPhillips , Royal Dutch Shell andBP were among the worst performers in the energy sector. The Energy Select Sector SPDR ETF dropped 5.4%.

More From The Street: Black Monday Poll: Where Do You Think Stocks Are Headed?

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