Stocks end higher, still log worst month since March 2020

Stocks notched broad gains Monday, but still posted their worst monthly loss since the early days of the pandemic, as Wall Street closes a tumultuous January wracked by worries that imminent interest-rate hikes will make everything in markets more challenging.

The S&P 500 came back from an early 0.4% dip to close 1.9% higher. Even so, it’s now 5.9% below the alltime high it set four weeks ago. It fell 5.3% in January, its worst month since falling 12.5% in March 2020, when it hit bottom after the pandemic suddenly shut down the global economy.

The Dow Jones Industrial Average rose 1.2% and the Nasdaq composite climbed 3.4%, its biggest single-day gain since early November 2020. Both also ended in the red for January, with the Dow shedding 3.3% and the Nasdaq losing 9%.

Wall Street shook this month as investors try to get ahead of a massive shift in markets, where the Federal Reserve is about to start withdrawing the tremendous stimulus it’s pumped into the economy and markets. The wide expectation is for the Fed to begin raising interest rates in March, among other moves to make borrowing money less easy.

But uncertainty about how sharply and how quickly the Fed will move has helped cause severe swings on Wall Street, not just day-to-day but also hour-to-hour. Morning drops for stocks have quickly given way to sharp losses in the afternoon, and vice versa. On Friday, a sudden upturn in the last hour of trading managed to keep the S&P 500 from logging its fourth weekly loss in a row.

“There’s systematic buying that goes on at the end of a really bad month like January, and that’s certainly taken place over the last day or two,” said Scott Lander, chief investment officer at Horizon Investments.

The S&P 500 rose 83.70 points to 4,515.55. The Dow gained 406.39 points to 35,131.86, after erasing an earlier loss of 229 points. The Nasdaq rose 469.31 points to 14,239.88.

The month’s heaviest losses have concentrated on parts of the stock market seen as the most expensive. Much of the focus has been on high-growth technology stocks, which were absolute stars of the pandemic amid expectations they can grow regardless of the economy.

Tech stocks in the S&P 500 rose 2.7% Monday.