Investors rushed out of stocks in early trade as fears over the escalating situation between Russia and Ukraine soured the mood on Wall Street, which already was looking toward a Federal Reserve meeting later this week in which officials are expected to lay out a more solid plan for increasing interest rates — a move likely to cool down the economy.
But then investors sniffed out good deals, market analysts said: beaten-down stocks that were relative bargains.
The S&P 500 index, the broadest measure of US stocks, had officially entered “correction” territory in the afternoon, which is defined as a 10% drop from its most recent high, as it fell by more than 3.8%. But by the close of trade Monday, it had gained about 0.3% to close at 4,410.
“Correction territory is often a psychological sweet spot for investors. They see the correction, and they see that it’s a healthy part of the markets,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.
“When everything started selling off, that got a lot of people’s attention.”
Meanwhile, the tech-heavy Nasdaq index, which had been hit hardest earlier in the day — at one point logging a decline of nearly 5% — closed trading up more than 0.6% at 13,855.
The roller-coaster of a day came after US stock indices last week turned in their worst week since March 2020.
Market volatility has increased in recent weeks as investors brace for the Fed’s expected withdrawal of pandemic-era economic support, which has provided the cheap money to fuel bets on ever-riskier assets.
“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.
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