By David Hodari 

Stocks bounced higher Tuesday, a break after two sessions of steep drops on Wall Street driven by rising anxieties about the health of global economic growth.

The Dow Jones Industrial Average climbed 223 points, or 1%, a welcome relief to traders after a brutal stretch of losses. The blue-chip index is down more than 6.5% in December, on pace for its worst month since May of 2010 in the midst of the European debt crisis.

The S&P 500 and Nasdaq Composite rose 0.8% in recent trading.

The recent selloff sent the blue-chip index, the S&P 500 and the tech-heavy Nasdaq Composite tumbling into correction territory. Monday's 2.3% fall for the Russell 2000 index of small-capitalization stocks put it in bear market territory for the first time since 2016.

"There's definitely a lot of concern out there," said Matthew Turner, European economist at Macquarie. "We still think the data point to trend growth but markets are forward-looking and if you look at the history of equities prices, they tend to peak before recessions start. They can, by themselves, push us towards one."

Worries about the state of markets around the globe are growing. More than half of fund managers surveyed in Bank of America Merrill Lynch's monthly report expect weakening global growth in 2019 -- the worst outlook since October 2008.

This week's main focus for investors is the Federal Reserve's policy meeting Wednesday and any policy decisions that come from it. The Fed is widely expected to raise short-term interest rates, but investors are increasingly expecting -- and hoping for -- more dovish commentary from Fed Chairman Jerome Powell on the path of rates for next year.

Mr. Powell has given mixed signals on Fed policy in recent months, spooking investors in October by saying rates were "a long way from neutral," referring to the point at which interest rates are neither spurring nor slowing economic growth. He later backtracked on those comments in November, saying rates were "just below" neutral.

Dovish guidance from the Fed may have mixed implications for markets, however.

"On the one hand, markets may see an even-less-hawkish-than-expected hike as a relief, but if the Fed acknowledges fears about growth it's not as straight forward," said Geoffrey Yu, head of the London investment office at UBS Wealth Management. "Right now, we're at a level where market pricing is not consistent with underlying economic data."

The latest criticism of the Fed from President Trump added to investors' unease. Mr. Trump tweeted that it was "incredible" that the Fed's board was considering raising interest rates again.

The yield on the 10-year Treasury note fell to 2.849% from 2.857% on Monday. Yields fall when prices rise.

In Europe, the pan-continental Stoxx Europe 600 index was 0.1% lower in late-morning trading, weighed down by a 1.2% fall in its oil-and-gas sector as concerns over rising supply dragged oil prices lower.

The fall in crude began late Monday and accelerated Tuesday, with prices dropping to fresh 14-month lows. Brent crude oil, the global benchmark, was down 2.6% to $58.07 a barrel and West Texas Intermediate futures fell 2.9% to $48.45 a barrel. Analysts cited the broader market selloff and persistent fears of growing supply.

Stocks sold off more heavily in Asia, where Japan's Nikkei fell 1.8% and Hong Kong's Hang Seng traded 1.1% lower. Most other indexes fell by slightly less.

In commodities, oil market investors were awaiting American Petroleum Institute inventory numbers, due Tuesday.

The Organization of the Petroleum Exporting Countries and its allies agreed to a production cut in Vienna on Dec. 7, but that restriction isn't set to take effect until Jan. 1.

Gold was up 0.1% at $1,252.80 a troy ounce.

Corrie Driebusch contributed to this article

Write to David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

December 18, 2018 10:16 ET (15:16 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.