NEW YORK (REUTERS) - Wall Street bounced back from a steep sell-off late in the session to close higher on Monday (Jan 24), with bargain hunters pushing the indexes into positive territory.
The S&P 500 earlier came close to confirming a correction as investors focused on concerns about an increasingly hawkish Federal Reserve and geopolitical tensions.
This came on the heels last week of the S&P 500 and the Nasdaq suffering their largest weekly percentage plunge since March 2020, when shutdowns to contain the coronavirus pandemic sent the economy spiralling into its steepest and most abrupt recession on record.
"I would not be surprised if today is the low point for the major averages," said chief investment strategist Sam Stovall from CFRA Research in New York.
Still, Mr Stovall added that January is often a barometer for the rest of the year.
"As goes January, so goes the year," Mr Stovall added. "A negative January in 2022 along with a negative first five days of the year would not bode well for the entire year's performance."
The United States 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.
"I think investors are over-assuming a very hawkish stance by the Fed," Mr Stovall said. "Granted, inflation is high and is likely to get higher before it starts to decline. Specifically we see the headline CPI (consumer price index) topping at 7.3 per cent for both January and February, but then coming down to 3.5 per cent by year-end." In a sign that geopolitical tensions are heating up, the North Atlantic Treaty Organisation 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.
Meanwhile a report from IHS Markit gave evidence that surging infections of the Omicron Covid-19 variant have caused a marked deceleration of business activity in the US.
According to preliminary data, the S&P 500 gained 13.77 points, or 0.31 per cent, to end at 4,411.71 points, while the Nasdaq Composite gained 97.25 points, or 0.71 per cent, to 13,866.17. The Dow Jones Industrial Average rose 108.45 points, or 0.32 per cent, to 34,373.82.
Fourth-quarter reporting season is in full swing, with 65 of the companies in the S&P 500 having posted results. Of those, 77 per cent have come in above expectations, according to data from Refinitiv.
On aggregate, analysts now see S&P 500 annual earnings per share growth of 23.7 per cent, per Refinitiv.
A series of disappointing earnings from big banks and, notably, lockdown darling Netflix, have overshadowed many better-than-expected results.
Tesla shares slid, leading declines among the mega-cap tech and tech-adjacent companies.
Kohl's Corp surged after Reuters reported private equity firm Sycamore Partners is preparing to make a bid for the department store chain days after a consortium backed by activist investment firm Starboard Value proposed a buyout.
