U.S. stocks staged a late comeback on Monday, with the S&P 500 and Nasdaq Composite hitting new lows for the year before closing up for the day.
The Nasdaq Composite rose 1.63% to 12,536.02, while the S&P 500 rose 0.57% to 4,155.38. The Dow Jones Industrial Average gained 84.29 points, or 0.26%, to close at 33,061.50. The Dow was down more than 500 points at its session lows.
The wild trading session came on the heels of a rough April for stocks. The Dow and S&P 500 are coming off their worst month since March 2020, when the pandemic took hold. The Nasdaq had its worst month since 2008.
David Katz, chief investment officer at Matrix Asset Advisors, said on CNBC's "The Exchange" that the market has been overly worried about an economic slowdown and investors should step in to buy the dip in stocks.
"You're able to buy a lot of great businesses at very attractive prices. Historically, that's been a very good time to put money to work," Katz said.
Other market strategists, however, warned of a possible short-lived relief rally and pointed to the fresh lows as a sign that stocks still had further to fall.
"Sentiment is negative, but we still didn't see a flush. We almost needed to see at least a break of these lows to see some more fear in the market, more stop levels triggered," said Keith Lerner, co-CIO at Truist Advisory Services.
"In some ways, as much as most technicians want to see support held, in my view you almost need to see that [break] to get a more durable bottom."
Tech was a particular weak point in April, but the group led the rebound on Monday. Netflix and Facebook-parent Meta Platforms jumped about 4.8% and 5.3%, respectively. Microsoft and Google-parent Alphabet advanced more than 2% each.
Apple and Amazon closed up less than 1% after spending much of the session in negative territory. Art Cashin of UBS said on CNBC's "Squawk on the Street" that the trading of Apple and Amazon in particular could be a barometer of the next steps for the broader market.
Semiconductors and energy stocks were two areas of strength on Monday. Intel and Chevron rose 3.1% and 2%, respectively, to support the Dow.
Volatility in the bond market likely contributed to the swings in stocks on Monday. The 10-year Treasury yield rose above 3% for the first time since 2018.
"3% is certainly important. … It's a psychological barrier that's got people worried about what the Fed is going to do," said Matt Maley of Miller Tabak.
Investors are looking ahead to Wednesday, when the Federal Open Market Committee will issue a statement on monetary policy. The decision will be released at 2 p.m. ET, with Federal Reserve Chairman Jerome Powell holding a press conference at 2:30 p.m.
"With inflation so high and earnings growth slowing rapidly, stocks no longer provide the inflation hedge many investors are counting on. Real earnings yield tends to lead real stock returns on a y/y basis by about 6 months. It suggests we have meaningful downside at the index level as investors figure this out," Morgan Stanley equity strategist Michael Wilson said in a note to clients.
Another key economic indicator will come Friday when April's jobs report is released.
— CNBC's Michael Bloom and Patti Domm contributed to this report.