MARTS’ ROCKY SEAS

Dip on hike worries

US stocks traded in choppy waters again Tuesday as investors braced for the Federal Reserve’s guidance on potential interest-rate hikes.

The Dow Jones Industrial Average pared its losses by the close of trade Tuesday after plunging more than 600 points earlier in the day. By the close of trade, the Dow was down by 67 points, or 0.2%, to end at 34,297.73.

March raise seen

Investors are weighing their tolerance for risk as the Fed began its two-day policy meeting Tuesday. The central bank is widely expected to signal an interest-rate hike in March — the first increase since the COVID-19 pandemic began — as it seeks to cool down an economy where inflation is stuck at 40year highs.

Meanwhile, the S&P 500 Index dropped more sharply — over 1.2% — while the tech-heavy Nasdaq index fell more than 2.2%.

The latest swings followed a wild day for stocks on Monday, where all three major indexes cratered, only to end in positive territory. The Dow plunged more than 1,000 points, only to recover in a furious rebound just before markets closed.

The CBOE Volatility index, tracked as a measure of investor anxiety, rose about 1%.

Leading cryptocurrencies continued their rebound after a weeks-long selloff. Bitcoin rose 3%, to $37,265, while ethereum rose 4% and solana rose nearly 10%.

The Fed is set to adopt a hawkish policy stance, ending pandemic-era support for the economy as it aims to curtail surging inflation. Higher interest rates increase costs for businesses and consumers, likely slowing economic growth.

“The market always gets nervous. You’ve always got to talk the market down from the ledge whenever there’s the discussion of higher interest rates,” Longbow Asset Management CEO Jake Dollarhide told The Post.

“There’s a happy medium where rates can go higher and stocks can go higher. People just need to be reminded of that. It’s like investors have amnesia every time this happens,” he added.

Bond reduction

The Fed has signaled at least three rate hikes in 2022, as well as plans to trim its nearly $9 trillion in bond holdings.

Geopolitical tensions have also weighed on US stocks as concerns mount that Russia will invade Ukraine. Futures turned sharply downward over the weekend after the State Department instructed the families of embassy staffers to leave Ukraine with Russian troops massed near the border.