July 6, 2022

Dow jumps 400 points and cuts a streak of losses for three days, Nasdaq outperforms 2.5%

Dow jumps 400 points and cuts a streak of losses for three days, Nasdaq outperforms 2.5%

The Dow Jones Industrial Average rose for the first day of four days on Tuesday after Russia appeared to be holding back from an immediate invasion of Ukraine, easing geopolitical tensions that have sent the stock market tumbling in the past three days.

Russian Ministry of Defense She said she started bringing back some troops to the deployment bases after exercises near the Ukrainian border.

The Dow jumped 422.67 points, or 1.2%, to 3,4988.84, supported by a 3.7% jump in Boeing. The S&P 500 rose 1.6% to 4471.07, and the heavy Nasdaq Composite advanced 2.5% to 14139.76. All three major benchmarks fell in the previous three sessions. The S&P 500 is about 7% off its high. The small-cap Russell 2000 index rose 2.8% on Tuesday.

Russian Defense Ministry spokesman Igor Konashenkov said the troops recently deployed to Russia’s southern and western military districts – which share a border with Ukraine – have completed their exercises and “have already begun loading onto railways and roads and the transition to its army will begin” garrisons today.

President Joe Biden Address the dispute on Tuesday afternoon, He said the United States would defend NATO members if the conflict intensified.

“If Russia advances, we will rally the world,” Biden said, adding that Washington’s allies were ready to impose strong sanctions that would “undermine Russia’s ability to compete economically and strategically.”

West Texas Intermediate crude prices fell about 3.6%, while the 10-year Treasury yield jumped to 2.04% as tensions eased. the VanEck Russia ETFa US-traded fund that invests in large Russian stocks, rose 5.8%.

Airlines and cruise stocks led the gainers, while energy companies were the biggest losers with the decline in oil prices. American Airlines It rose 8.1% and Carnival Corp. Added 6.7%. at the same time, ExxonMobil decreased 1.3% and ConocoPhillips lost 2%.

Certain technology names have also been charged at a higher cost. Netflix Added 2.8% and Tesla It rose 5.3%. Video Zoom It rose 3.4%.

“Easing escalating tensions between Russia and Ukraine helps with the overall sentiment today, but that’s not the only good news. US Covid cases are now 80% down from their January peak, which is another sign that reopening will move forward,” Ryan said. Dietrich from LPL Finance.

In addition to the Ukrainian drama, investors took another look at the inflation picture on Tuesday.

Product Price Index, which measures goods and services in final demand, rose 1% for the month versus the Dow Jones estimate of 0.5%. Over the past 12 months, the measure has increased by an unadjusted 9.7%. Excluding food, energy and commercial services, core PPI rose 0.9% for the month, topping estimates of 0.4%.

“The news that Russia is withdrawing some of its forces from the Ukrainian border is fueling an attempt to raise stock prices and lower oil prices,” said Kathy Bostancik, chief US economist at Oxford Economics. “However, NATO is still awaiting confirmation of a reversal, and in the meantime, wholesale prices in the US for the year are starting to rise at an accelerating pace. This confirms that the Fed is behind the inflation curve, and they will need to tighten the front load for this year.”

Wall Street exited a volatile trading session on Monday. The Dow closed down more than 170 points. The S&P 500 was down 1.2% before ending the day 0.4% lower. The Nasdaq Composite was down 0.9% at one point before closing just below the flat line.

These moves came at a time when the Russian-Ukrainian conflict appeared to be escalating. Secretary of State Anthony Blinken ordered the closure of the US Embassy in Kiev, Ukraine, on Monday, citing “Dramatic acceleration of Russian troop build-upOn the borders of Ukraine.

Concerns about multiple interest rate increases by the Federal Reserve also kept investors on edge.

St. Louis Fed President James Bullard told CNBC’s Steve Liesman on Monday that the central bank needs to be assertive in fighting inflation. The consumer price index rose last month at the fastest year-on-year pace since 1982, prompting Citigroup and Goldman Sachs to raise their interest rate hike forecasts for 2022 to seven.

“I think we need to charge for more planned property removal than we’ve been before. We were surprised by the upside of inflation. That’s a lot of inflation,” Pollard said.

“Our credibility is at stake here, and we must respond to the data,” he added. “However, I think we can do it in an orderly manner and not disrupt the markets.”

The Federal Reserve releases the minutes of its latest meeting on Wednesday. Investors will be watching it carefully for any new insights into its plans to raise interest rates, inflation expectations or comments on its balance sheet.

said Michael Aaron, Chief Strategic Investment Officer, State Street Global Advisors.

—Elliott Smith of CNBC contributed to this report.