Inflation fears, market uncertainty fuel volatile day on Wall Street

It was a wild day on Wall Street.

Early in the day, stocks started dropping. And dropping fast. The Dow was down about 1,100 points by midday.

But then buyers saw opportunity and moved in. The market bounced back amid a late buying spree, pushing the Dow and the S&P 500 index to close with small gains.

"When you have many unknowns in the market that's a recipe for volatility, which we're seeing today," says financial planner Brian Gilder.

Economists say one big unknown is inflation. Consumer prices rose 7% in December compared to last year. That's the biggest jump in 40 years.

People are feeling it at the supermarket and at the gas station.

"We put gas in and it's like 'when is it going to stop?' It keeps going up," said Agustin Barajas of Monrovia.

Some expect the Fed will need to raise interest rates several times this year.

"We don't know how many rate hikes we're going to have," Gilder says. "And also I think many on Wall Street are re-evaluating these high-tech companies to see what their true valuations are."

Barajas is looking at the market.

"Big tech like that, you can definitely see some people pulling their money out because they don't have confidence in the overall health," says Barajas.

Even as stocks turned up a bit Monday to end higher, the Dow has lost more than 9% from its all-time high on Jan. 4.

Bitcoin has lost half its value since November.

And for those looking at their retirement funds, according to Fidelity the market plunge has wiped out more than $7,000 from the average American's 401(k).

"I think a really good lesson today is to take some time to understand what you own in your 401(k) and understand exactly what you own," Gilder says. "Because many people don't know what they own or why they own it and that causes panic. And when we have panic we make bad financial decisions."

The Fed will meet Tuesday. By Wednesday it should make an announcement on interest rates. It's expected rates will go up as soon as March.

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