Topline
Stocks rebounded from a recent losing streak on Wednesday, with investors getting a temporary respite as recently surging energy prices moderated somewhat, though Wall Street remains on edge thanks to the ongoing Russia-Ukraine conflict, an upcoming inflation report and the Federal Reserve’s planned interest rate hike next week.
Now what? Stocks rallied as recently surging oil prices fell nearly 10% on Wednesday.
Key Facts
The market rebounded after falling since last week: The Dow Jones Industrial Average jumped 2.3%, around 750 points, while the S&P 500 rose 2.8% and the tech-heavy Nasdaq Composite 3.5%.
Stocks rallied across the board as investors hoped for a potential resolution to the Russia-Ukraine conflict (though talks have taken place, there has been little accomplished so far), with recent reports suggesting that the European Union will not make Ukraine a member, “a headline that’s sure to be welcome news in Moscow,” explains Vital Knowledge founder Adam Crisafulli.
Oil prices, which have skyrocketed to a high of nearly $130 per barrel in recent weeks amid the ongoing war in Ukraine, took a sudden plunge downward on Wednesday, falling roughly 10%: U.S. benchmark West Texas Intermediate now sits at $105 per barrel, while global benchmark Brent crude is trading at around $109 per barrel.
Falling commodities prices helped boost markets significantly higher, a day after President Joe Biden announced an historic U.S. ban on Russian oil imports as the latest round of punitive sanctions against Moscow for the invasion of Ukraine.
Travel and consumer stocks in particular bounced back on Wednesday after recent fears that surging oil and gas prices would severely impact consumer spending, with shares of Nike rising 6%, Carnival Cruise Line 7% and United Airlines 7%.
Crucial Quote:
“U.S. stocks are rebounding as Wall Street embraces the exhaustion with the pricing surge across the commodity complex,” says Edward Moya, senior market analyst for Oanda. “It has been almost two weeks since Russia invaded Ukraine, and it appears that traders are becoming a little optimistic a compromise could happen.”
Tangent:
Though Biden’s announcement of a U.S. ban on Russian oil was widely supported by the American public, several major economists now fear that a sustained surge in energy prices will likely exacerbate decades-high inflation and lead to slower economic growth.
What To Watch For:
“This is NOT a ‘happy rally,’” insists Crisafulli, noting that investors are “still quite nervous” and largely remain “skeptical about Ukraine-Russia concluding anytime soon.” Wall Street still has plenty to worry about beyond the ongoing conflict, notably a new inflation report on Thursday. Analysts are expecting consumer prices to rise slightly in February even as inflation already sits at 40-year highs, up 7.5% from a year ago. Adding to the laundry list of uncertainties is the Federal Reserve’s upcoming monetary policy meeting next week, though the central bank is widely expected to raise interest rates by 0.25%.
Further Reading:
Stocks Fall After Historic U.S. Ban On Russian Energy, Oil Nears $130 Per Barrel (Forbes)
Here’s How Biden’s Historic Ban On Russian Oil Will Hit The Economy (Forbes)
Dow Falls 800 Points With No End In Sight For Russia’s Invasion Of Ukraine (Forbes)
Rate Hikes Are Coming In March Despite ‘Uncertain’ Impact From Russia’s Invasion Of Ukraine, Powell Says (Forbes)
Source: https://www.forbes.com/sites/sergeiklebnikov/2022/03/09/dow-jumps-800-points-as-stocks-take-a-breather-but-worries-are-far-from-over/