Easing Geopolitical Concerns Lead To Significant Rebound On Wall Street
Stocks showed a strong move to the upside during trading on Tuesday, regaining ground following the sell-off seen over the three previous sessions. The major averages all moved sharply higher, with the tech-heavy Nasdaq leading the advance.
The major averages finished the session near their best levels of the day. The Dow jumped 422.67 points or 1.2 percent to 34,988.84, the Nasdaq spiked 348.84 points or 2.5 percent to 14,139.76 and the S&P 500 surged 69.40 points or 1.6 percent to 4,471.07.
The rebound on Wall Street came amid easing geopolitical concerns following news Russia is pulling back some troops from the Ukrainian border.
Russian Defense Ministry spokesman Igor Konashenkov said units from Russia’s southern and western military districts, which border Ukraine, have already begun returning to their bases after completing combat training.
The news has helped ease concerns about a Russian invasion of Ukraine, which members of the Biden administration recently warned could be imminent.
Concerns about a destabilizing conflict between Russia and the Ukraine have weighed on stocks over the past few sessions.
While the dispute between Russia and Ukraine has not been resolved, the troop pullback allowed traders to breathe a sigh of relief.
Meanwhile, traders largely shrugged off a report from the Labor Department showing U.S. producer prices jumped by much more than expected in the month of January.
The Labor Department said its producer price index for final demand surged up by 1.0 percent in January after rising by an upwardly revised 0.4 percent in December.
Economists had expected producer prices to increase by 0.5 percent compared to the 0.2 percent uptick originally reported for the previous month.
Excluding prices for food, energy and trade services, core producer prices advanced by 0.9 percent in January after climbing by 0.4 percent in December.
At the same time, the Labor Department said the annual rate of producer price growth slowed to 9.7 percent in January from 9.8 percent in December. Economists had expected the yearly growth to slow to 9.1 percent.
The annual rate of growth in core producer prices also decelerated to 6.9 percent in January from 7.0 percent in December.
Sector News
Airline stocks turned in some of the market’s best performances on the day, with the NYSE Arca Airline Index soaring by 5.6 percent. The index ended the session at its best closing level in three months.
Substantial strength was also visible among semiconductor stocks, as reflected by the 5.5 percent spike by the Philadelphia Semiconductor Index.
Shares of Tower Semiconductor (TSEM) skyrocketed after the Israeli chipmaker agreed to be acquired by Intel (INTC) for approximately $5.4 billion in cash.
Networking stocks also saw considerable strength on the day, resulting in a 3.9 percent surge by the NYSE Arca Networking Index.
Arista Networks (ANET) led the sector higher after reporting better than expected fourth quarter results and providing upbeat guidance.
Computer hardware, brokerage, software and chemical stocks have also moved notably higher, while oil and gold stocks bucked the uptrend amid decreases by the prices of their associated commodities.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan’s Nikkei 225 Index and Hong Kong’s Hang Seng Index both slid by 0.8 percent, although China’s Shanghai Composite Index bucked the downtrend and rose by 0.5 percent.
Meanwhile, the major European markets showed strong moves back to the upside on the day. While the U.K.’s FTSE 100 Index jumped by 1 percent, the French CAC 40 Index and the German DAX Index surged up by 1.9 percent and 2.0 percent, respectively.
In the bond market, treasuries came under pressure as the easing geopolitical concerns reduced their safe haven appeal. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.9 basis points to 2.045 percent.
Looking Ahead
Reports on retail sales, industrial production and homebuilder confidence may attract attention on Wednesday along with the minutes of the latest Federal Reserve meeting.
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