Wall Street reverses, ends higher in late session rally

NEW YORK — Wall Street bounced back from a steep sell-off late in the session to close higher on Monday, with bargain hunters pushing the indexes into positive territory by closing bell.

The S&P 500 earlier came close to confirming a correction by appearing on track to close more than 10% down from its most recent alltime high reached on Jan. 3 as investors focused on concerns about an increasingly hawkish Federal Reserve and geopolitical tensions.

The S&P 500 recovered 4.3 percentage points from its session low to it closing level, the largest such swing since March 26, 2020, when Wall Street was bouncing back from the global slump caused by the coronavirus pandemic.

Earlier in the day, the indexes were all more than 2% lower. The S&P appeared to be on course to confirm a correction, and the Russell 2000 looked as if it would confirm it was in a bear market.

This abrupt, late-session U-turn came in the wake of S&P 500 and the Nasdaq suffering their largest weekly percentage plunge since March 2020, when shutdowns to contain the pandemic sent the economy spiraling into its steepest and most abrupt recession on record.

The US Federal Reserve is due to convene its two-day monetary policy meeting on Tuesday, and market participants will be parsing its concluding statement and Chairman Jerome Powell’s subsequent Q&A session for clues as to the central bank’s timeline for hiking key interest rates to combat inflation.

In a sign that geopolitical tensions are heating up, NATO announced it was putting forces on standby to prepare for a potential Russian invasion of Ukraine.

The threat of potential conflict in that region helped US Treasury yields dip, pausing their recent upward climb, which has pressured stocks in recent months.

The Dow Jones Industrial Average rose 99.13 points or 0.29% to 34,364.50; the S&P 500 gained 12.19 points or 0.28% to 4,410.13; and the Nasdaq Composite added 86.21 points or 0.63% to 13,855.13.

All 11 major sectors of the S&P 500 spent most of the trading day deep in red territory, but by market close all but three were green. Consumer discretionary enjoyed the largest percentage gain.

Fourth-quarter reporting season is in full swing, with 65 of the companies in the S&P 500 having posted results. Of those, 77% have come in above expectations, according to data from Refinitiv.

On aggregate, analysts now see S&P 500 annual EPS growth of 23.7%, per Refinitiv.

Declining issues outnumbered advancing ones on the NYSE by a 1.49-to-1 ratio; on Nasdaq, a 1.08-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week high and 31 new lows; the Nasdaq Composite recorded four new highs and 1,319 new lows.

Volume on US exchanges was 18.42 billion shares, compared with the 10.95 billion average over the last 20 trading days. —