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- At its low on Monday, the S&P 500 had come more than 12% off the all-time peak it reached early this month. The stock market has crashed in recent weeks amid concerns that the Federal Reserve would get aggressive on interest rates, taking away the stimulus that fueled market gains in 2020 and 2021. Given the sharp slide recently, is it time to buy the dip?
After the Rollercoaster
- Many investors saw Monday's intraday low as a prime buying opportunity. The S&P 500 plunged during the first several hours of trading, adding to recent weakness. In the early afternoon, the S&P 500 reached a mark of 4,222.62 -- its lowest level since June.
- With the early slide, the S&P 500 posted a decline of nearly 4% on the session, threatening to record its fifth consecutive losing session and sixth loss in the previous seven sessions. The intraday low also marked a decline of more than 12% since the index set its all-time high of 4,818.62 on Jan. 4.
- Buyers stepped in during Monday's afternoon action, prompting a complete reversal of the early slide. The index closed at 4,410.13 -- posting a fractional gain for the session and ending more than 4% off its intraday low.
Time to Buy the Dip?
- Was Monday's midday reversal enough to mark a bottom? The medium-term outlook remains murky. The worries about the Fed remain intact, as the central bank has signaled three rate increases for the year. Meanwhile, many experts have an even more aggressive rate-hiking program in mind.
- Still, many analysts see the recent slide as a chance to step into select names. However, many of these market watchers advocate a selective approach, rather than a return to the "everything rally" mentality that marked much of 2021.
- As an example, J.P. Morgan strategist Marko Kolanovic called the recent bearishness "overdone" and "out of line with activity momentum." He pointed to the likelihood of a strong earnings season as a catalyst for renewed buying.
- In terms of potential safe havens, he pointed to Asian equities and financials.
- Looking at another closely watched name, hedge fund manager Dan Niles, who has been an outspoken bear since at least late last year, begrudgingly suggested that it was now time to step back into the market. The founder and portfolio manager at Satori Fund advocated a stock-picking approach, avoiding speculative stocks and focusing on firms with market power and strong profitability.
- "As much as I hate to do this, I'll probably be buying some stocks today," he told CNBC during the market downturn early in Monday's session.
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