U.S. stock futures were little changed in post-market trading Monday after equities staged a historic turnaround at the end of a whipsaw session wrought by heightened fears over rate hikes and a lackluster start to earnings season. Geopolitical tensions in the Ukraine also weighed on markets.

Contracts on all three major indexes hovered near the flatline heading into overnight trading. Earlier in the afternoon, the Dow recovered losses of more than 1,100 points to end higher, and the S&P 500 bounced back from correction territory to close in the green.

The CBOE volatility index, or VIX, closed at about 29.90 after crossing above 37 in intraday trading, its highest level since November 2020. In their newsletter, Nicholas Colas and Jessica Rabe of DataTrek Research sounded the alarm on recent jumps by the so-called “fear gauge.” The VIX closed last week’s trading at 29 to pass the initial 28 level DataTrek deemed significant, or “the first statistically valid level of market panic.” In Monday’s session, the VIX hovered around 38 before retreating, briefly passing the next level the firm said to watch for: 36.

This content is not available due to your privacy preferences.Update your settings here to see it.

“If you are trading this market, we continue to advise caution,” the DataTrek founders said. “Clarity on Fed policy will not come until Wednesday’s FOMC meeting, and even then, commentary from the Fed and Chair Powell may be insufficient to calm investors.”

The downward momentum in equities was fueled by escalating worries around monetary policy as the Federal Reserve looks to intervene on rising inflation levels more aggressively than previously anticipated with tighter policy and rate hikes. Investors are bracing for the central bank’s January monetary policy meeting, set to begin Tuesday, followed by a new monetary statement and press conference with Fed Chair Jerome Powell on Wednesday.

“The Fed is in a very tough spot,” MJP Wealth Advisors President Brian Vendig told Yahoo Finance Live. “They know history has shown that if they move too quickly on interest rates, it adds to the risk of moving the economy into a slowdown and the risk of a recession.”

Story continues

With corporate earnings underway, stock watchers looking to fourth-quarter reports for relief from inflation jitters have found little reason for optimism so far. Goldman Sachs chief U.S. equity strategist David Kostin pointed out that of 64 S&P 500 companies that have reported results since the season began, a slightly below average 52% have beaten analyst consensus earnings estimates.

More concerning, according to Goldman, is a lack of guidance from companies amid unpredictable inflation and COVID-related conditions.

“Investors are most interested in forward-looking guidance from management, and recent information on that front has been concerning,” Kostin said. “Five of the six S&P 500 firms that provided formal 1Q 2022 guidance following 4Q results lowered expectations.”

LPL Financial equity strategist Jeff Buchbinder had a more upbeat take: pointing out that despite supply chain disruptions, wage and other cost pressures, and the Omicron COVID-19 variant, with the S&P 500 constituents that reported so far, index earnings are still tracking to 5% upside, in line with the long-term historical average.

“The volatility we’ve seen this year is uncomfortable, but it is well within the range of normal based on history,” Buchbinder wrote in a note.

“The S&P 500 has averaged three pullbacks of 5% or more per year and one correction of at least 10% per year over its long history,” he said. "After just one 5% dip last year, and huge gains off the 2020 lows, we were due for a dip."

6:00 p.m. ET: Futures muted after turbulent trading session

Here's how contracts on Wall Street's main indexes fared heading into the overnight session:

  • S&P 500 futures (ES=F): -2.50 points (-0.06%), to 4,401.25

  • Dow futures (YM=F): +17.00 points (+0.05%), to 34,270.00

  • Nasdaq futures (NQ=F): -17.25 points (-0.12%) to 14,483.75

  • Crude (CL=F): +$0.76 (+0.91%) to $84.07 a barrel

  • Gold (GC=F): +$1.80 (+0.10%) to $1,843.50 per ounce

  • 10-year Treasury (^TNX): -0.7 bps to yield 1.750%

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn

(305) 707 0888