Wall Street Drop
The Securities and Exchange Commission said it would "review the unusual trading activity" and "take appropriate steps to protect investors".
There are rumours the drop may have been caused by an erroneous "fat finger" trade at a Wall Street bank.
The term refers to when a trader enters data incorrectly.
There was speculation that a Citigroup employee had been responsible for an erroneous trade - however, the bank said there was no evidence of this.
"We, along with the rest of the financial industry, are investigating to find the source of today's market volatility," Citigroup spokesman Stephen Cohen said in a statement.
"At this point, we have no evidence that Citi was involved in any erroneous transaction."
US President Barack Obama said the authorities were evaluating the unusual activity and hoped to prevent it from happening again.
"They will make findings of their review public along with recommendations for appropriate action," he told reporters on Friday.
Read more: bbc
