Stocks were enjoying a bounce Wednesday afternoon, providing some breathing room for the S&P 500 after it came close to entering its second market correction of 2022.
The large-cap benchmark was up less than 1% to trade near 4,210 in early afternoon activity, after ending Tuesday at 4,175.20 in a tech-led selloff that dragged it down by 2.8%. Stocks have seen volatile day-to-day and intraday swings in recent sessions.
A close at or below 4,168.44 would see the S&P 500 SPX, +1.30% enter a correction, according to Dow Jones Market Data. A correction is defined as a pullback of at least 10% — but nor more than 20% — from a recent peak. A correction is exited after rise of at least 10% from a correction low.
The S&P 500 previously suffered a correction on Feb. 22, when it closed at 4,304.76, down 10.25% from its early January record close. Stocks extended a slide in early March as investors reacted to Russia’s Feb. 24 invasion of Ukraine, which sent oil prices soaring to nearly 14-year highs and stoked geopolitical anxiety.
A closing low of 4,170.70 on March 8 marked the bottom of that move. The S&P 500 exited the correction on March 29, when it finished at 4,631.60, up 11.05% from the March 8 closing low.
Exits from correction territory have tended to see the index continue to gain ground in subsequent weeks and months, though not always.
It has been 20 trading days since the S&P 500 exited its previous correction. While it doesn’t appear likely at the moment, a fall into correction today would mark the shortest re-entry since November 2008, in the heart of the 2007-09 financial crisis, when the S&P 500 dropped back into correction territory just seven days after exiting one, Dow Jones Market Data noted. That correction later turned into a bear market.
Stocks have suffered in April as investors adjusted expectations around the Federal Reserve and the prospect of a series of outsize rate increases and an aggressive wind-down of the central bank’s balance sheet as it attempts to rein in inflation running at its hottest in more than 40 years.
Disappointing earnings from some formerly highflying megacap tech-related names have also helped fuel a selloff, deepening a bear market for the Nasdaq Composite COMP, +1.18%, which fell 4% on Tuesday to end at its lowest since December 2020.
The Nasdaq Composite ended Tuesday down more than 22% from its record close set in November. It entered a bear market last month. The Dow Jones Industrial Average DJIA, +1.21% remains in correction mode, ending Tuesday down nearly 13% from its Jan. 3 record close.
—Mike DeStefano contributed to this article.