* Indexes drop over 1 pct, but cut steeper earlier losses
* 10-year bond yields rise near four-year highs
* Indexes down: Dow 1.59 pct, S&P 500 1.28 pct, Nasdaq 1.45 pct (Updates with mid-afternoon trading)
By Lewis Krauskopf
NEW YORK, Feb 8 (Reuters) - U.S. stocks tumbled anew on Thursday in another trading session with big swings, as investors remained on edge after several days of volatile trading.
Major indexes cut their losses somewhat in afternoon trading after falling more than 2 percent earlier.
The benchmark S&P 500 was still set for a second day of declines, following sharp swings in recent sessions including its biggest drop in more than six years that pulled equities away from record highs.
“The dust hasn’t settled yet, and I think both buyers and sellers are trying to figure out what this market really wants to do,” said Jonathan Corpina, senior managing partner for Meridian Equity Partners in New York.
"I would think that this continues to happen for the next few trading sessions for everything to kind of get flushed out.”
The retreat in equities had been long awaited by investors as the market climbed steadily to record high after record high with few bumps.
The sharp selloff in recent days was kicked off by concerns over rising inflation and bond yields, sparked by Friday's January U.S. jobs report, with investors pointing to additional pressure from the violent unwind of trades linked to bets on volatility staying low.
The 10-year U.S. Treasury note yield rose as high as 2.884 percent, nearing Monday's four-year peak of 2.885 percent, after the Bank of England said interest rates probably need to rise sooner than previously expected.
"What we're seeing today is continued concerns around interest rates going higher, around valuations in the stock market," said Chris Zaccarelli, chief investment officer with Independent Advisor Alliance in Charlotte, North Carolina.
The Dow Jones Industrial Average fell 395.79 points, or 1.59 percent, to 24,497.56, the S&P 500 lost 34.33 points, or 1.28 percent, to 2,647.33 and the Nasdaq Composite dropped 102.43 points, or 1.45 percent, to 6,949.55.
Financials and consumer discretionary stocks were among the biggest decliners, while utilities were the lone major S&P sector in positive territory.
Investors are weighing whether the sharp swings this week are the start of a deeper correction or just a temporary bump in the nine-year bull market.
The market's main gauge of volatility, the Cboe Volatility Index, rose 3.07 to 30.80 on Thursday, nearly three times the average level of the past year.
In earnings news, Twitter rose 14.7 percent after the social media company delivered its first quarterly profit and an unexpected return to revenue growth.
Additional reporting by Chuck Mikolajczak and Sinead Carew in New York and Tanya Agrawal in Bengaluru; Editing by Chizu Nomiyama and James Dalgleish