Stocks cut steep losses on Tuesday as investors covered short positions after Federal Reserve Chairman Ben Bernanke said he was prepared to take more steps to help the fragile economic recovery.

The Dow Jones industrial average <.DJI> was down 230.87 points, or 2.17 percent, at 10,424.43. The Standard & Poor's 500 Index <.SPX> was down 19.30 points, or 1.76 percent, at 1,079.93. The Nasdaq Composite Index <.IXIC> was down 21.52 points, or 0.92 percent, at 2,314.31.