US stocks come back to finish higher after volatile trading day

A stock selloff that at one point rivaled any of the last two years was all but wiped out as dip buyers emerged by Monday’s close, the latest breathtaking reversal in markets rattled by geopolitical tensions and the Federal Reserve’s campaign against inflation.

Retail, industrial and energy companies led a rebound in the S&P 500 into the close after the gauge tumbled as much as 4% earlier in the day. The dollar gained, while 10-year Treasuries were little changed.

Traders remain resolute in anticipating the Fed will plow on with increasing borrowing costs even as riskier assets tumble. Swap markets show a quarter-point hike in March and close to a full percentage point rise for the whole of 2022. Morgan Stanley’s Michael Wilson said January’s equity rout “fits nicely” with his so-called fire and ice narrative, according to which markets were set for a drawdown amid tighter policy and decelerating economic growth. In anything, the retreat has further to go as “winter is here” for stocks, he wrote.