US stocks rise as investors attempt to rebound after the S&P 500 closes in a bear market on rate fears

• US stocks attempted a rebound on Tuesday after the S&P 500 fell into a bear market on Monday.
• The back-and-forth volatility comes as investors fret about the prospect of rising interest rates.
• The Federal Reserve is now expected to raised interest rates by 75 basis points on Wednesday.

US stocks traded higher on Tuesday, attempting a turnaround after the S&P 500 dropped nearly 4% on Monday and officially entered bear market territory.

The back-and-forth volatility in the stock market comes as investors fret about an expected sizable increase in interest rates on Wednesday when the Federal Reserve concludes its meeting of the Federal Open Market Committee.

The Fed was previously expected to raise interest rates by 50 basis points, but following Friday's hot CPI inflation report, the central bank is now expected to raise interest rates by 75 basis points. Though, there's no telling if the interest rate hike will help cool inflation, which is mainly being driven by supply side constraints, rather than demand.

Meanwhile, those higher interest rates could have a chilling effect on the economy and push mortgage rates to levels not seen in many years.

Here's where US indexes stood shortly after the 9:30 a.m. ET open on Tuesday:

• S&P 500: 3,766.06, up 0.44%
• Dow Jones Industrial Average: 30,572.07, up 0.18% (66.77 points)
• Nasdaq Composite: 10,855.86, up 0.44%

Goldman Sachs is now warning investors that the chances of a US recession are on the rise as the Fed is likely to hike interest rates by 75 basis points at its next two meetings. Traders now expect the Fed to hike rates to close to 4% in 2023.

But perhaps what's worse than high inflation, and even a recession, is a prolonged period of stagflation, which the Fed is trying to prevent with its interest rate hikes. Over 80% of investors now expect stagflation to shock the stock market within the next year, according to Bank of America.

Amid the ongoing chaos in the cryptocurrency market, with bitcoin briefly falling below $22,000 on Tuesday, Tether's stablecoin barely lost its dollar peg again. Tether's stablecoin hit $0.9975 after the Celcius crypto network halted withdrawals over the weekend.

West Texas Intermediate crude oil rose as much as much as 1.63% to $122.93 per barrel. Brent crude, oil's international benchmark, jumped as much as 1.70% to $124.35.

Bitcoin rose 1.47% to $22,393. Ether prices jumped 3.94% to $1,218.

Gold fell as much as 0.50% to $1,822.70 per ounce. The yield on the 10-year Treasury was flat at 3.35%.