Market Snapshot: Dow jumps over 400 points as Russia-Ukraine tensions ease

United States

U.S. stocks traded higher, bond yields rose, and oil prices slumped Tuesday morning on signs of an easing of tensions over Ukraine, with Russian President Vladimir Putin saying Moscow is ready for talks with NATO on limits to missile deployments in Europe, and following a claim that Russia is pulling back some troops in the area.

What are benchmarks doing?
  • The Dow Jones Industrial Average DJIA, +1.25% rose 444 points, or 1.3%, to 35,011.
  • The S&P 500 SPX, +1.45% gained 67 points, or 1.5%, to trade at 4,469.
  • The Nasdaq Composite COMP, +1.98% was up 275 points, or 2%, at 14,066.

On Monday, the Dow fell 172 points, or 0.5%, while the S&P 500 lost 0.4% and the Nasdaq Composite COMP, +1.98% fell fractionally.

What’s driving markets?

Following a meeting with German Chancellor Olaf Scholz, Putin said that Moscow was ready for talks with the U.S. and NATO on limits on missile deployments and military transparency. Earlier Interfax reported the Russian Defense Ministry as saying that units of the southern and western districts are returning to base after completing military exercises.

NATO Secretary-General Jens Stoltenberg said that Moscow’s calls for continued diplomacy were cause for cautious optimism, “but so far we have not seen any sign of de-escalation on the ground from the Russian side,” news reports said.

However, markets are still digesting the likelihood of a series of interest rates rises by the Federal Reserve starting in March to combat inflation which has risen to a 40 year high.

And the latest update on U.S. inflation at the producer level did nothing to put worries to rest. The January producer-price index showed a 1% monthly rise, double the 0.5% increase expected by economists surveyed by The Wall Street Journal. The increase in wholesale prices over the past year, meanwhile, slowed a tick to 9.7% from 9.8%, which was the biggest advance in the index since it was configured in 2009 and one of the fastest rates since the early 1980s.

“Investors have been looking for some signs of easing, but early stage price pressures gaining further momentum and likely to exacerbate near-term market volatility,” said John Lynch, chief investment officer for Comerica Wealth Management, in emailed comments.

In other data, the New York Fed’s Empire State business conditions index edged up to 3.1 in February, after a surprise negative 0.7 reading in January. Economists had expected a stronger rebound to a reading of 10, according to a survey by The Wall Street Journal.

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The “repricing of central bank expectations is the key driver of a good deal of the recent volatility,” said Michael Strobaek, global chief investment officer of Credit Suisse. “The geopolitical tensions, however, namely the escalation of tensions between NATO and Ukraine on the one side and Russia on the other, are less predictable, complicated and more difficult to price for markets.”

An armed conflict could lead global stock markets to drop more than 10%, he said.

Read: What a Russian invasion of Ukraine would mean for markets as Biden warns Putin of ‘severe costs’

Which companies are in focus?
  • Shares of Marriott International Inc. MAR, +5.70% rallied 5.7%, pushing into record territory, after the hotel operator reported fourth-quarter adjusted profit and revenue that more than doubled to beat expectations, as revenue per available room (RevPAR) continued to improve as COVID-19 conditions eased.
  • Intel Corp. INTC, +1.37% on Tuesday struck a $ 5.4 billion deal to buy Tower Semiconductor, as it seeks to bolster its manufacturing capabilities. Intel shares rose 1.3%.
  • Virgin Galactic shares SPCE jumped more than 20% after the company said it is opening a limited opportunity for people to buy future spaceflight reservations on Feb. 16, for a total price of $ 450,000.
  • Animal health company Zoetis Inc.’s shares ZTS rose1.8% after it beat estimates for the fourth quarter and offered upbeat revenue guidance for 2022.
  • Shares of MoneyGram International Inc. MGI, +18.57% soared 18% after the digital payments company announced an agreement to be acquired by private-equity firm Madison Dearborn Partners LLC (MDP) in a cash deal valued at $ 1.8 billion, including $ 799 million in debt.
How are other assets faring?
  • Treasury yields continued to bounce Tuesday, with the yield on the 10-year Treasury note BX:TMUBMUSD10Y above 2%. Yields and debt prices move opposite each other.
  • The ICE U.S. Dollar Index DXY, which tracks the currency against a basket of six major rivals, declined 0.3%.
  • West Texas Intermediate crude for March delivery CLH22 retreated 4.7% to around $ 91 a barrel on the New York Mercantile Exchange, pulling back from the highest front-month contract finish since Sept. 3, 2014. The April gold GC00, -1.04% contract shed 1.1% to trade below $ 1,850 an ounce.
  • The Stoxx Europe 600 SXXP rose 1.4%, while London’s FTSE 100 UKX traded 0.9% higher.
  • The Shanghai Composite SHCOMP ended 0.5% higher on Tuesday, while the Hang Seng Index HSI fell 0.8% in Hong Kong and Japan’s Nikkei 225 NIK declined 0.8%.