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These vehicles develop intermittent electrical faults inside the ABS controller (which is attached to the ABS pump near the master cylinder). When mine, also a '96 850 started happening often I finally replaced the controller at a cost of around $500. Ouch.
This seems to be one of the parts on our vintage of 850 which will almost certainly fail on almost every vehicle at some point. Seems like a design weakness to me, but Volvo shows no signs of doing anything to help the effected customers. I think they like collected big $$$ for the part.
You can read more about this problem at:
http://www.volvospeed.com/Repair/abstrax.htm
John
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