Stocks Post First Gain in Four Days…..
U.S. equities finished with solid gains, posting the first advance in a week after four days of pressure that culminated with yesterday’s failed recovery late in the session. A pullback in the surge in crude oil prices, along with other commodities that have rallied, seemed to be the upside catalyst and offer a reprieve to the markets that have been roiled by inflation worries and uncertainty regarding the ultimate impact of next week’s expected beginning of the Fed’s rate hike campaign. Optimism of a diplomatic resolution to the Russia/Ukraine war surfaced to also provide sustenance to the rebound, with Ukraine saying it is open to talks with Russia regarding Ukrainian neutrality but with security conditions. The moves came after yesterday the U.S. joined the U.K. in banning Russia’s key energy exports. Treasuries declined to cultivate a rebound in yields from last week’s dramatic tumble, and the U.S. dollar was solidly lower to trim a recent jump, while gold also was sharply lower. In equity news, GE announced a $3.0 billion share buyback plan and MongoDB posted a smaller-than-expected loss and issued upbeat guidance. In economic news, job openings dipped from a record high and mortgage applications rebounded as rates declined. Europe rallied, even with the European Central Bank monetary policy decision looming on tomorrow’s horizon, while markets in Asia were mixed with South Korea closed for its presidential election.
The Dow Jones Industrial Average rose 654 points (2.0%) to 33,286, the S&P 500 Index increased 107 points (2.6%) to 4,278, and the Nasdaq Composite advanced 460 points (3.6%) to 13,256. In heavy volume, 5.6 billion shares of NYSE-listed stocks were traded, and 5.3 billion shares changed hands on the Nasdaq. WTI crude oil tumbled $15.00 to $108.70 per barrel. Elsewhere, the gold spot price plunged $48.10 to $1,995.20 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 1.1% at 98.01.
Volatility continued as the markets rebounded after yesterday’s failed attempt, with the U.S., European Union, and other global allies throwing the sanctions book at Russia as a result of its invasion of Ukraine. The unprecedented flurry of sanctions now has Russia becoming the world’s most sanctioned country, surpassing the likes of Iran and North Korea. The actions against the country were aimed at crippling the country’s ability to maintain financial system stability and cutting off Russia from participating in the global economy. Some of the most critical among the plethora of sanctions have included restricting some financial institutions from using the SWIFT global payment system and freezing assets and foreign currency reserves of its central bank, and most recently moves by the U.S. and U.K. to halt importing of Russian energy.
Already sizzling inflation concerns have shot up to a new stratosphere to unnerve the markets as crude oil prices have surged, while other commodity prices have also rallied due to eastern Europe’s large influence on energy and agriculture trade. However, crude took a sudden move downward following reports that Iraq indicated that it could increase output at the request of OPEC and its allies, known as OPEC+, while Secretary of State Antony Blinken also signaled that the United Arab Emirates would support increased production by OPEC+. As well, some potential optimism of a diplomatic resolution seemed to emerge, as Ukraine said it is open to talks regarding Russia’s goal of ensuring Ukrainian neutrality as long as it is given security guarantees from the U.S., U.K., and Germany.
Treasury prices have seen wild swings with last week’s rally in a flight-to-safety that also boosted the U.S. dollar and gold, being followed by this week’s drop that has seen yields regain losses. Meanwhile, crude oil prices have witnessed a meteoric rise to multi-year highs, even briefly surpassing the highs seen in 2008.
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