Wall Street rallies in hopes Russia and Ukraine can resolve conflict

FILE PHOTO: Traders work on the NYSE trading floor in New York
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. March 21, 2022. REUTERS/Brendan McDermid

March 29, 2022

By Chuck Mikolajczak

NEW YORK (Reuters) – U.S. stocks rose on Tuesday, with the Dow and S&P posting their fourth straight session of gains amid optimism about some progress being made towards a deal to resolve the conflict between Russia and Ukraine.

Russia pledged to scale back military operations around Kyiv and in northern Ukraine, while Ukraine proposed adopting neutral status, the first sign of progress toward peace in weeks.

Oil and other commodity prices eased, which helped allay worries about rising inflation and the monetary policy stance of the Federal Reserve, which has begun raising interest rates to counter rising prices.

“If you look at the month that this war has been going on, the market has priced in a lot more bad news than good news,” said Art Hogan, chief market strategist at National Securities in New York.

“It certainly shows that the market has a natural spiral spring that will be a reaction function to any good news and we saw a bit of that this morning but everything has to be taken with a grain of salt and we have to actually see things play instead of actually being talked about.”

The Dow Jones Industrial Average was up 338.3 points, or 0.97%, to 35,294.19, the S&P 500 was up 56.08 points, or 1.23%, to 4,631.6 and the Nasdaq Composite was up 264.73 points, or 1.84% to 14,619.64.

After a dismal start to the year for stocks that saw the S&P 500 embark on a correction widely described as falling more than 10% from its recent high, the benchmark index is now down less than 3% on a year-to-year basis.

Still, there were signs of nervousness in the market that the Fed could make a policy mistake that could lead to a slowdown or possibly a recession in the economy as the widely held 2-year/10-year US Treasuries fell for the first time since September reversed 2019.

“While I think the end result of an aggressive Fed tightening cycle is a recession, I don’t expect it to happen quickly. Historically, all recessions have been preceded by a 2:10 inversion, but not all inversions lead to recessions,” said Ellis Phifer, managing director, fixed income research at Raymond James in Memphis, Tennessee.

After falling more than 2% on Monday, the S&P energy index was the only declining sector as crude oil prices fell more than 1%.

As the conflict in Ukraine has escalated in recent weeks, already rising prices have put further upward pressure on commodities such as wheat, energy and metals.

But despite a recent surge in inflation, Tuesday’s data showed that US consumer confidence has recovered from a one-year low in March, while the current working environment is favoring workers.

Real estate, up nearly 3% during the session, was the best performing sector, suggesting some investors see persistent inflation but no recession on the horizon. It was the largest one-day percentage gain for the group since Jan. 28.

FedEx Corp rose 3.70% after the global delivery conglomerate appointed operations manager Raj Subramaniam as its chief executive.

Volume on US exchanges was 13.22 billion shares compared to the average of 14 billion for the entire session over the past 20 trading days.

Rising issues predominated on the NYSE at a 4.20 to 1 ratio; on the Nasdaq, a 2.97 to 1 ratio favored movers.

The S&P 500 posted 51 new 52-week highs and no new lows; the Nasdaq Composite posted 71 new highs and 38 new lows.

(Reporting by Chuck Mikolajczak; Additional reporting by Lewis Krauskopf and Gertrude Chavez-Dreyfuss; Editing by Jonathan Oatis and David Gregorio) Wall Street rallies in hopes Russia and Ukraine can resolve conflict


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