The radio in one of my other cars (regrettably, a non-Volvo) did much the same -- a $10 replacement antenna from Radio Shack solved that problem.

Moreover, you have a wagon. The antenna wire goes from near the tailgate to the radio -- it's long and might be damaged. I know that Radio Shack sells (or used to sell) an inexpensive "rubber duckie" style antenna that fit the wagons perfectly and worked very well. (People sometimes forget to lower the antenna when driving into the garage and snap them off.)

I suspect that it's easier and cheaper to replace the antenna than the stereo.

I'd explore that possibility before jumping into a new stereo -- unless, of course, you want added features in the stereo such as a CD player...

--
Don Foster (near Cape Cod, MA)