After it came close to entering its second market correction on 2022, the stock market was enjoying a bounce Wednesday afternoon, which provided some breathing room for the S&P 500.
The large-cap benchmark was up less than 1% to close close to 4,210 in early afternoon activity, after ending Tuesday at 4,175. The tech-led selloff of 20 dragged it down by 2.8%. In recent sessions, stock prices have seen volatile day-to- day and intraday swings.
According to Dow Jones Market Data, 44 would see the S&P 500 SPX enter a correction. A correction is defined as a pullback of at least 10% but not more than 20% from a recent peak. A correction is exited after a rise of 10% from a correction low.
The S&P 500 previously suffered a correction on February 22, when it closed at 4,304. It was down 10.25% from its January record close. In early March investors reacted to Russia's invasion of Ukraine on February 24, which sent oil prices to nearly 14 year highs and caused geopolitical anxiety.
The bottom of that move was on March 8 at 70. The S&P 500 closed the correction on March 29 when it finished at 4,631. The March 8 closing low increased by 60, up 11.05%.
Exits from correction territory have seen the index gain ground in subsequent weeks and months, though not always.
See S&P 500 exits correction: Here is what history says happens next to the U.S. stock-market benchmark.
It has been 20 trading days since the S&P 500 exited its previous correction. A fall into correction today would be 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, according to Dow Jones Market Data. The correction later turned into a bear market.
In April, investors adjusted expectations around the Federal ReserveFederal Reserve and the threat of a series of outsize rate increases and a downward wind-down of the central bank's balance sheet as it tried to control inflation running at its hottest point in more than 40 years, as well as the possibility of a series of outsize rate increases and an aggressive wind-down of the central bank's balance sheet.
As investors grapple with Fed near peak hawkishness, earnings from some formerly high-flying tech-related names have also helped fuel a selloff, deepening the bear market for the Nasdaq Composite COMP, which fell 4% on Tuesday to its lowest since December 2020.
The Nasdaq Composite ended Tuesday down more than 22% from its November close. It entered a bear market last month. The Dow Jones Industrial Average DJIA is in correction mode and ended Tuesday down nearly 13% from its Jan. 3 record close.