Following the worst week for U.S. stocks since the early days of the coronavirus pandemic, market volatility continued Monday — partly due to worries about Russian military movements near Ukraine.
The Dow Jones Industrial Average closed up 100 points after six consecutive days of losses. For most of Monday’s session, it appeared there would be a significant seventh day of losses, with the benchmark index in a free-fall, dropping 1,100 points (3.3%) before staging an extraordinary recovery.
It was the sharpest one-day comeback for the Dow and the S&P 500 index since October 2008.
The tech-laden Nasdaq composite closed 0.6% higher earlier in the day, trading more than 4% lower.
The North Atlantic Treaty Organization announced Monday it is dispatching ships and jet fighters to eastern Europe following the increase in Russian military forces near Ukraine.
The U.S. Defense Department also announced Monday it has placed 8,500 troops on standby for possible deployment to central and eastern Europe to bolster NATO defenses. The previous day, the State Department instructed the families of U.S. diplomats in Ukraine to leave the country.
“The market already had downward momentum. Throwing in some geopolitical headlines was essentially another reason to sell,” according to Tom Essaye, president of Sevens Report Research.
Investors have been anxiously eyeing anticipated action by the Federal Reserve to stem inflation because interest rate hikes could throttle growth for the U.S. economy.
A decision on interest rates by the Fed is expected on Wednesday.
The remarkable afternoon turnaround for the stock market followed a U.S. Treasury auction of two-year notes.
“There was a lot of demand for that Treasury auction that came out at 1 p.m.," Essaye told VOA. “People around the market looked and said, ‘Wow, maybe bond investors and traders aren't quite as nervous about the Fed going crazy on rate hikes as everybody else is.'”
The White House brushed off concern about the market volatility.
“We focus on the trends of the economy, not any one day,” White House press secretary Jen Psaki told reporters during a routine briefing Monday.
“The market is up about 15%” compared to when Joe Biden took over from Donald Trump as U.S. president, noted Psaki, adding that “unlike his predecessor, the president does not look at the stock market as a means by which to judge the economy.”