Stocks recover as investors jump in after big sell-off

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NEW: Stocks recovered from big early losses as investors jumped in before the closing bell.

. The Dow Jones Industrial Average swung 1,217 points and closed up 0.3% after dropping 1,000 points as investors anticipated inflation-fighting measures from the Federal Reserve and fretted over possible conflict between Russia and Ukraine. Benchmark indexes flirted with near 4-month lows as the market readies for the Fed to raise interest rates to tame inflation, which is at its highest level in nearly four decades. Retailers notched some of the biggest gains: Gap jumped nearly 8%.

The Fed has kept downward pressure on longer-term interest rates by buying trillions of dollars worth of government and corporate bonds, but those emergency purchases are scheduled to end in March. Nudging rates higher is intended to help slow economic growth and the rate of inflation. Technology stocks led the decline. Higher rates make shares in high-flying tech companies and other expensive growth stocks relatively less attractive.

Other economists say they worry that the Fed may act too aggressively. They argue that numerous rate hikes would risk causing a recession and wouldn’t slow inflation in any case. In this view, high prices mostly reflect snarled supply chains that the Fed’s rate hikes are powerless to cure.

 

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