Markets live, Thursday, March 3, 2022
Wall Street took another strong swing on Wednesday, this time back in rally mode, as stocks and Treasury yields rose even as U.S. crude oil prices hit their highest level in more than a decade .
The S&P 500 rose 1.9%, recouping its losses from earlier in the week, after Federal Reserve Chairman Jerome Powell said he supported a more modest interest rate hike this month. ci than some investors feared. He also said he still expects inflation, which is at its highest level in 40 years, to moderate throughout the year.
“Although some Fed governors have recently said, ‘Oh my God, this is such a huge crisis,’ conventional wisdom is slow and steady winning the race right now,” said JJ Kinahan, chief strategist at TD. Ameritrade.
The comments helped push the market higher, adding to the modest gains from earlier in the morning. Other segments of the market also gained ground a day after concerns over Russia’s invasion of Ukraine sent the S&P 500 down 1.5% and sent prices of all kinds of stocks soaring. raw materials.
Treasury yields jumped to recoup some of their steep losses from last week. Gold retreated and some nervousness among stock investors on Wall Street eased after swinging sharply in recent days.
“We’ve seen wild swings, but no major shifts in the indices,” said Jeff Kleintop, chief global investment strategist at Charles Schwab. “Geopolitical conflicts can be very unsettling, but you don’t tend to get bear markets out of them, just periods of volatility.”
Markets are spinning wildly as investors try, sometimes blindly, to gauge how much Russia’s attack on Ukraine will drive up the prices of oil, wheat and other commodities where the region is a producer major. On top of that, there are concerns about the impact of upcoming interest rate hikes by the Federal Reserve and other central banks around the world on the economy and inflation.
Powell said in congressional testimony that the Fed was set to raise its key interest rate for the first time since 2018. But he also said the attack on Ukraine could have confusing terms, with its impact on the US economy “very uncertain”, adding that “we are never on automatic pilot”.
The Fed is balancing on a tightrope where it needs to raise interest rates enough to contain the highest inflation in generations, but not so much as to plunge the economy into a recession. Meanwhile, higher interest rates tend to put downward pressure on stocks and most other investments.
The 10-year Treasury yield jumped to 1.89% from 1.72% on Tuesday night, while the two-year Treasury jumped to 1.53% from 1.31%. Yields, however, remain well below what they were before the Russian invasion. The 10-year yield was above 2% last month, before plunging as investors threw themselves into investments seen as safer amid war concerns.
The price of U.S. oil jumped another 7% to $110.60 a barrel, the highest level in just over a decade. Brent, the international standard, climbed 7.6% to $112.93 a barrel.
Leaders of OPEC and other major oil-producing nations decided on Wednesday to stick to their plan of gradually increasing oil production. The OPEC+ coalition of oil producers, made up of OPEC members led by Saudi Arabia and non-cartel members led by Russia, chose to boost oil production by 400,000 barrels per day in April .
The move follows a perhaps less impactful decision by the United States and other major governments at the International Energy Agency to release 60 million barrels of strategic reserves to boost supply.
“Markets rejected the idea that 60 million barrels of strategic reserves released would be a result of Russian supply risks,” Tan Boon Heng of Mizuho Bank said in a report. “Russia pumps out more than that in just six days.”
In the stock market, all the uncertainty over oil prices and inflation has led to big swings not only from day to day but also from hour to hour. The S&P 500 hovered between gains of 0.4% and 2.2% on Wednesday. It closed up 80.28 points at 4,386.54.
The Dow Jones Industrial Average rose 596.40 points, or 1.8%, to 33,891.35, while the Nasdaq composite gained 219.56 points, or 1.6%, to 13,752.02.
More than 90% of S&P 500 stocks rose, with technology, financial and health care companies accounting for a significant portion of the rally. Bank stocks led the winners, climbing 2.6% as higher long-term interest rates can mean bigger profits for them lending. Energy stocks also helped lift the index due to higher energy prices.
Ross Stores climbed 6.1% after the retail chain reported higher profit for its latest quarter than analysts expected.
Ford jumped 8.4% after announcing it was accelerating its transformation into an electric vehicle company and splitting its electric vehicle and internal combustion businesses into two individual businesses.
Stock markets around the world were mixed. The French CAC 40 rose 1.6%, the German DAX gained 0.7% and the Japanese Nikkei 225 fell 1.7%.
Russia’s central bank said trading on the Moscow Stock Exchange would remain closed for a third day on Wednesday, although trading in currencies and precious metals resumed for the first time this week.
Late Tuesday, President Joe Biden announced he was joining US allies in closing the country’s airspace to Russian planes, the latest in a series of sanctions and other measures designed to isolate Russia.
But Biden also said in his annual State of the Union address that he would try to shield Americans from the impact of rising oil prices. “I will use every tool at our disposal to protect American businesses and consumers,” Biden said.