Stocks climbed, while bonds fell with the dollar as speculation that geopolitical tensions could be easing overshadowed data showing inflation is still running hot.
The equity market halted a three-day drop as Russian President Vladimir Putin said he hopes for a diplomatic solution to tensions with the U.S. and its allies and announced a partial pullback of thousands of troops massed near the Ukrainian border. Meantime, President Joe Biden said it remains possible that Russia will invade Ukraine, and noted the U.S. hasn’t yet verified Moscow’s claims that it has withdrawn some forces. Tech shares led gains in the S&P 500, while energy producers joined a slump in oil. Treasury 10-year yields topped 2%. Gold, the Japanese yen and the Swiss franc fell.
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Markets have whipsawed as the Ukraine crisis added to existing concerns over inflationary pressures and the withdrawal of stimulus by the Federal Reserve. The U.S. producer price index jumped in January by more than forecast as companies contend with supply-chain and labor constraints.
“Speculation around the Fed’s action plan, which goes hand-in-hand with inflation, has no doubt been driving market volatility, but so have geopolitics,” said Mike Loewengart, managing director of investment strategy at E*Trade from Morgan Stanley. “And with tension between Russia and Ukraine seemingly cooling, at least for now, the market could welcome some certainty. So while the PPI read is hotter than expected, heightened inflation may already be priced into the market.”
Some corporate highlights:
- Cryptocurrency-exposed stocks joined a rally in Bitcoin.
- Boeing Co.’s 787 Dreamliner suffered a new blow as U.S. regulators on Tuesday said they would retain authority for inspecting the jets before delivery.
- Marriott International Inc. reported earnings that beat expectations as demand for leisure travel powered the hotel recovery.
- Space-tourism company Virgin Galactic Holdings Inc. said it would open commercial-ticket sales.
- Intel Corp. agreed to acquire Tower Semiconductor Ltd. for about $5.4 billion, part of a push into the outsourced chip-manufacturing business.
Here are some key events this week:
- EIA crude oil inventory report, Wednesday
- FOMC minutes, Wednesday
- China CPI, PPI, Wednesday
- G-20 finance ministers, central bank governors meet, Thursday through Feb. 18
- Cleveland Fed President Loretta Mester, St. Louis Fed President James Bullard speak, Thursday
- U.S. Monetary Policy Forum: speakers including Fed officials Charles Evans, Christopher Waller and Lael Brainard, Friday
Some of the main moves in markets:
- The S&P 500 rose 1.6% as of 4 p.m. New York time
- The Nasdaq 100 rose 2.5%
- The Dow Jones Industrial Average rose 1.2%
- The MSCI World index rose 1.4%
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.5% to $1.1359
- The British pound was little changed at $1.3539
- The Japanese yen was little changed at 115.63 per dollar
- The yield on 10-year Treasuries advanced six basis points to 2.05%
- Germany’s 10-year yield advanced two basis points to 0.31%
- Britain’s 10-year yield was little changed at 1.58%
- West Texas Intermediate crude fell 3.8% to $91.88 a barrel
- Gold futures fell 0.9% to $1,853.40 an ounce–With assistance from Andreea Papuc, Abigail Moses, Peyton Forte and Emily Graffeo.