Stocks clawed back to finish above water Monday after all three major indexes plunged earlier in the day.
The Nasdaq composite closed with a gain of 0.6 percent after falling nearly 5 percent after the market opened Monday. The Dow Jones Industrial Average reversed a 1,000-point intraday loss to close up 100 points, and the S&P 500 index closed with a gain of 0.3 percent after plunging roughly 4 percent.
Monday's remarkable comeback came after weeks of steady losses across the stock market driven by a range of health and geopolitical threats to the economy and the prospect of higher interest rates. Stocks fell steadily last week as investors began to grapple with the COVID-19 omicron variant's throttling of the economic recovery, looming Federal Reserve interest rate hikes and potential blowback from a Russian invasion of Ukraine.
The Federal Open Market Committee - the Fed's monetary policy panel - is set to meet Tuesday and Wednesday before announcing its views on the state of the economy. While the agency is not expected to hike interest rates Wednesday, any future plans laid out by the panel or Fed Chairman Jerome Powell in a press conference could shape the rest of the week for the market.
"The Fed is scrambling to control inflation and markets have gone from expecting a gradual interest rate hiking cycle to an accelerated tightening action until inflation eases. The current Fed pivot has proved disruptive to growth forecasts and that may unsettle many at the Fed," wrote Edward Moya, senior market analyst at OANDA, in a Monday analysis.
"The Fed needs to send a message they are tackling inflation, but they don't need to overcommit themselves. The Fed's best option is to signal they will raise rates by 25 basis points in March and signal another one is coming in May."
The ongoing slowdown driven by the omicron variant could also disrupt those plans.
The unprecedented spike in coronavirus cases driven by the omicron variant has throttled the recovery from the coronavirus recession. More than 12 million Americans have missed work because they or a dependent contracted COVID-19 earlier this month, and rising health concerns have pushed Americans away from activities with face-to-face interaction.
While another fiscal stimulus bill is out of the question, there is growing momentum in Congress behind targeted relief for businesses hit hard by omicron, including restaurants and bars.