Stocks climb back after steep slide

Stocks finished a volatile day slightly higher on Monday after reversing a steep slide caused by uncertainty over inflationfighting measures from the Federal Reserve and the possibility of conflict between Russia and Ukraine.

A late-day buying spree pushed the benchmark S&P 500 index to a 0.3% gain after pulling it out of so-called correction territory — a drop of 10% or more from its recent high.

Monday’s turnaround followed a threeweek decline for the S&P 500, which last week had its worst five-day stretch since the start of the pandemic.

The S&P 500 had been down as much as 4% Monday. The index has recovered from an intraday loss that big only three times in the past. The tech-heavy Nasdaq index rose 0.6% after recovering from a nearly 5% descent.

Early in the day, benchmark stock indexes flirted with near 4-month lows as investors anticipated guidance from the Fed later this week about its plans to raise interest rates to tame inflation, which is at its highest level in nearly four decades.

But rising prices at supermarkets, car lots and gas stations are raising concerns that consumers will pare back spending to limit the pressure on their budgets. Companies have warned that supply-chain problems and higher raw materials costs could crimp their profits.

The Fed has kept downward pressure on longer-term interest rates by buying trillions of dollars worth of government and corporate bonds, but those emergency purchases are scheduled to end in March. Nudging rates higher is intended to help slow economic growth and the rate of inflation.

“There’s a short-term panic and part of that is the high level of uncertainty around what the Fed is going to do,“said Sylvia Jablonski, chief investment officer at Defiance ETFs.

Investors are also keeping an eye on developments in Ukraine. Tensions soared Monday between Russia and the West over concerns that Moscow is planning to invade Ukraine, with NATO outlining potential troop and ship deployments.

The S&P 500 rose 12.19 points to 4,410.13. It’s now 8.1% below the all-time high it set on Jan. 3.

The Dow rose 99.13 points to 34,364.50. The Nasdaq gained 86.21 points to 13,855.13.

Small company stocks also bounced back. The Russell 2000 rose 45.59 points, or 2.3%, to 2,033.51. The index had been down 2.8%.

Bond yields mostly rose after falling earlier in the day. The yield on the 10-year Treasury rose to 1.77% from 1.74% late Friday.

Higher interest rates tend to make shares in high-flying tech companies and other expensive growth stocks relatively less attractive. Tech stocks accounted for much of the S&P 500’s early slide.

The wave of selling also extended to cryptocurrencies. Bitcoin fell as low as $33,000 overnight but rallied back above $36,000 by late afternoon.