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The stock market swoon appeared set to continue into a fourth week, with all the major benchmarks notching massive intraday losses.
Negative readings on IHS Markit's Flash Manufacturing Purchasing Managers Index (PMI) and Flash Services PMI – both of which came in well below economists' consensus estimates today (55.0 vs. 56.9 expected; 50.9 vs. 54.9 expected, respectively) – added to the bearish narrative on Wall Street, says Michael Reinking, senior market strategist for the New York Stock Exchange.
Specifically, it has been "dominated by increasing geopolitical risks; the hawkish Fed tone in anticipation of Wednesday's Federal Open Market Committee rate decision; and slim earnings beats combined with lacking earnings guidance," he writes.
"The environment we have been in for the past 13 years or so was created by quantitative easing, zero interest rates, and there is no alternative," says Matthew Tuttle, CEO and chief investment officer at Tuttle Capital Management. " Now that the Fed is going to unwind and raise rates, it is causing a repricing of the entire market." He believes that whatever the Fed is going to say on Wednesday is likely now priced in, and a short-term bounce isn't out of the quesion.
"However, I would expect that [bounce] to be short-lived and expect volatility through at least the end of the quarter until the market fully digests," Tuttle adds.
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And bounce is exactly what the market did today. Bargain hunters swooped in during the final minutes of trading, sending the Dow Jones Industrial Average, which was off more than 1,115 points at its intraday low, up 99 points, or 0.3%, to 34,364.
The S&P 500 Index and Nasdaq Composite also erased their earlier losses to end the day higher (+0.3% at 4,410; +0.6% at 13,855).
YCharts
Other news in the stock market today:
For a moment today, it looked as if the S&P 500 was going to join the Nasdaq in correction territory, which is defined as a decline of at least 10% from the most recent peak. Specifically, the index hit an intraday low of 4,222, well below its correction level of 4,316.
When the markets are barreling lower, as they've done thus far in 2022, it's really easy to lose your resolve – even if you consider yourself a buy-and-hold investor. This is the hardest part of the job.
"Investors have grown accustomed to steady, consistent gains over the past couple of years which makes the current bumpy ride feel more uncomfortable," says Jeff Buchbinder, equity strategist for LPL Financial.
But remember, markets don't move in a straight line, and drawbacks are a normal part of the process. So, instead of saying "woe is me," look for opportunities within the stock market – including in high-yield dividend stocks or monthly dividend payers, whose steady stream of income can help protect a portfolio against bouts of volatility.
For some more tips, make sure to check out our guide on how to maneuver through a stock market correction. Scary as they are, pullbacks come with the territory – and having a plan in place can help investors better deal with them.
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