Stocks climb as investors keep eyes on Fed, Russia-Ukraine crisis

U.S. stocks rallied in a comeback Thursday after closing lower in the previous session to extend a streak of recent turnabouts as investors monitor Russia’s war in Ukraine and adjust to the Federal Reserve’s monetary tightening plans.

[Click here to read what’s moving markets heading into Friday, March 25]

The S&P 500 popped 1.4% to 4,520.16, while the Dow Jones Industrial Average added 350 points, or 1%, to 34,707.94. The tech-heavy Nasdaq Composite gained 1.9% to 14,191.84. Thursday’s moves mark a rebound from Wednesday’s sell-off and build on a pattern of up and down days for U.S. equities.

The United States will expand its sanctions on Russia in response to its invasion of Ukraine, targeting members of the country’s parliament and the central bank’s gold reserves, the White House said Thursday. Washington is also set to build on its humanitarian assistance by accepting 100,000 Ukrainian refugees and providing an additional $1 billion in food, medicine, water and other supplies.

The initiatives come as President Joe Biden and NATO allies convene in Brussels for a series of summits to discuss the conflict.

In Russia, the Moscow Exchange partially reopened Thursday after a nearly monthlong shutdown to resume local trading in 33 securities, including oil giant Gazprom and Russian majority state-owned financial institution Sberbank. The Central Bank banned short-selling on stocks, however, and prohibited foreign investors from selling stocks. The benchmark MOEX index (IMOEX.ME) gained as much as 10% in early trading.

The White House in a statement Thursday called the re-opening a “charade” and said the government was “artificially propping up the shares of companies that are trading.”

Wednesday marked two years since the S&P 500 bottomed in the 2020 global stock market crash after the World Health Organization moved to declare COVID-19 an official pandemic. Since then, the benchmark has registered its best two-year gain — more than 100% from the low — since 1937, according to data from Bespoke Investment Group.

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Although the recovery makes the period the best two-year bull run in history in terms of strength, per Bespoke, U.S. stocks have had a rocky start to 2022 amid a backdrop of growing headwinds.

Historically high levels of inflation have tasked the Fed with reining in surging price levels without slowing economic growth. Stocks have oscillated between gains and losses as traders adjusted to hawkish comments earlier this week from Fed Chair Jerome Powell that indicated officials were prepared to lean into higher short-term interest rates “as needed” to mitigate fast-rising price levels. Powell’s comments come just a week after the central bank lifted its benchmark Federal Funds Rate by 0.25% (to a target range of 0.25% to 0.50%).

“Policymakers were more hawkish than anticipated, exceeding estimates for interest rates and inflation, while reducing forecasts for economic growth,” Comerica Wealth Management Chief Investment Officer John Lynch said in a note.

Since 1958, the last nine interest rate tightening campaigns have seen the S&P 500 register less than average returns of roughly 3.0% in the one-year period following the initial rate hike, Lynch pointed out. However, the index has shown the propensity to climb for more than three years following the initial rate hike, with annualized returns of about 18.0%.

“The era of quantitative easing is seemingly over, and quantitative tightening has begun,” Lynch said. “Though the policy dynamics are shifting, we encourage investors to continue to focus on the long-term fundamentals supporting growth in the economy and corporate profits.”

Tightening also risks bringing the yield curve, the relationship between short- and long-term interest rates of fixed-income securities issued by the U.S. Treasury, closer to inverting. An inverted yield curve, when the short-term rates exceed the long-term rates, has been a signal of a pending economic recession in the past.

“With an economy in late cycle, fears of impending slowdown make defensive sectors relatively more attractive,” Commonwealth Financial Network global investment strategist Anu Gaggar said in commentary. “Thus, for an equity investor, it is imperative to pick your spots carefully.”

“While a paring back of equities may not be necessary, a defensive relative positioning going into a possible slowdown may help investors ride the wave,” he added.

Despite the Fed’s move to raise rates providing some temporary clarity to traders who for months have awaited steps forward on monetary tightening, geopolitical turmoil in Eastern Europe and its economic toll continue to muddy the bank’s path ahead in fighting inflation.

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4:00 p.m. ET: S&P jumps 1.4%, Dow adds 350 points, and Nasdaq gains nearly 2%

Here were the main moves in markets at the end of Thursday’s session:

• S&P 500 (^GSPC): +63.95 (+1.44%) to 4,520.19

• Dow (^DJI): +348.65 (+1.01%) to 34,707.15

• Nasdaq (^IXIC): +269.23 (+1.93%) to 14,191.84

• Crude (CL=F): -$3.47 (-3.02%) to $111.46 a barrel

• Gold (GC=F): +$24.50 (+1.26%) to $1,961.80 per ounce

• 10-year Treasury (^TNX): +2 bps to yield 2.3410%

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11:34 a.m. ET: Fed’s Evans supports ‘timely’ rate hikes but says bank must be prudent

Chicago Fed President Charles Evans said the Federal Reserve needs to raise interest rates “in a timely fashion” this year and in 2023 to mitigate high inflation before it is embedded in U.S. psychology and becomes even harder to get rid of.

Evans warned, however, the central bank should tread carefully as it tightens monetary policy and take the time to assess the status of supply chains snarls and the impact of Russia’s war in Ukraine on the economy.

“My own view is that, given the pressures that I see, I will be comfortable with … increasing by a quarter (of a percentage point)” at each policy meeting this year, and through March of next year, Evans said. “Maybe a 50 helps – I’m open-minded about that.”

He added that the larger discussion will be around what to do once the Fed’s policy rate reaches the neutral level at which it neither brakes nor stimulates the economy.

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11:26 a.m. ET: General Mills notches best 2-day gain on better-than-expected earnings

Shares of General Mills (GIS) rose for a second straight day after the food giant reported better-than-expected earnings results and full-year guidance on Wednesday.

The company lifted forecasts on its full-year core sales and profit thanks to a boost from higher prices and strong demand for cereals, snack bars and pet food.

“More important than the 3Q beat, in our view, was the company raising its full-year outlook (beyond what was expected exiting 2Q),” Deutsche Bank analyst Steve Powers said in a note.

General Mills stock was up 2.65% to $65.93 per share as of 11:24 a.m. ET after climbing as much as 6% in early trading.

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10:23 a.m. ET: Nikola shares pop as company readies for EV truck production

Shares of Nikola Corp. (NKLA) jumped as much as 15% after the company said it would start production of its electric truck on schedule.

At its analyst day on Wednesday, the electric-vehicle maker said it commenced manufacturing Tre battery electric vehicle (BEV) at its facility in Coolidge, Arizona on March 21. The company also announced it expects to deliver 300 to 500 semi-trucks this year.

Nikole is preparing to start production of the Tre BEV truck at its factory in Germany in June 2023.

Other electric vehicle makers, including legacy automakers such as Ford and General Motors, are also set to deliver their first EVs this year as demand heats up. However supply chain snafus and higher material costs have disrupted their timelines.

Nikola was up 9.28% to $9.99 per share as of 10:20 a.m. ET.

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10:06 a.m. ET: Minneapolis Fed’s Kashkari sees 7 quarter-point hikes in 2022

Minneapolis Federal Reserve Bank President Neel Kashkari said he anticipates seven quarter-point interest rate hikes this year to help mitigate inflation but warned against hiking too aggressively.

“We need to adjust,” Kashkari said Thursday at the Fargo-Moorhead Chamber of Commerce’s Midwest Economic Outlook Summit, adding that inflation is not proving as temporary as he had thought it would be. “The data just keeps coming in in that direction, and we just have to respond.”

Kashkari thought the Fed would not need to raise rates at all this year as recently as September.

“There’s a danger to overdoing it,” he said, if pandemic-snarled supply chains get fixed faster than expected or labor participation improves more than expected. “We’re going to get information.”

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9:30 a.m. ET: Stocks open higher to extend string of recent swings in U.S. equities

Here were the main moves in markets at the start of trading Thursday:

• S&P 500 (^GSPC): +20.28 (+0.46%) to 4,476.52

• Dow (^DJI): +100.32 (+0.29%) to 34,458.82

• Nasdaq (^IXIC): +72.10 (+0.52%) to 13,994.70

• Crude (CL=F): -$0.78 (-0.68%) to $114.15 a barrel

• Gold (GC=F): +$11.00 (+0.57%) to $1,948.30 per ounce

• 10-year Treasury (^TNX): +6.4 bps to yield 2.3850%

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9:22 a.m. ET: New orders on US core capital goods fall in February

U.S.-made capital goods registered an unexpected drop February as shipments slowed, but demand for goods remained robust in a sign manufacturing is likely to continue expanding.

The Commerce Department reported new orders for non-defense capital goods excluding aircraft, a closely-watched measure for business expenditures, slipped 0.3% last month. The decline comes after core capital goods orders jumped 1.3% in January.

Economists surveyed by Bloomberg anticipated core capital goods orders rising 0.5%.

Even as spending is shifting back to services, demand for goods remained strong, keeping manufacturing growing. However, the sector, which accounts for 11.9% of the economy, continues to battle supply chain snafus.

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9:02 a.m. ET: LME nickel trading spikes to hit 15% Limit

Nickel jumped by the 15% exchange limit for a second straight day in London. The moves place bearish position holders in the spotlight just two weeks after the market was roiled by an historic short squeeze.

Futures contracts on the metal remained locked at the price limit on the London Metal Exchange early Thursday as the latest spike extends a period of volatility for the market.

In early March, prices soared over 250% across two trading sessions during the short squeeze centered on China’s Tsingshan Holding Group Co. before the market was suspended.

Meanwhile, hedge funds and other investors are weighing legal action against the London Metal Exchange over the recent debacle in the nickel market, according to a report by then Evening Standard.

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8:41 a.m. ET: New jobless claims fall to 187,000 in more than five-decade low

Applications for unemployment insurance fell sharply in the latest weekly data to set a more than 50-year low as the red-hot labor market showed no signs of cooling in the near-term.

The Labor Department latest weekly jobless claims report showed 187,000 claims were filed in the week ended March 19, coming in better than the 210,000 economists surveyed by Bloomberg had expected.

New jobless claims reached the lowest level since September 1969. Continuing claims also fell further to reach 1.35 million — the least since January 1970.

The labor market has remained a point of strength in the U.S. economy, with job openings still elevated but coming down from record levels as more workers rejoin the labor force from the sidelines.

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7:14 a.m. ET: US equity futures jump as investors seek to recover Wednesday’s losses

Here were the main moves in futures markets ahead of the open Thursday:

• S&P 500 futures (ES=F): +21.15 points (+0.48%) to 4,468.75

• Dow futures (YM=F): +126.00 points (+0.37%) to 34,376.00

• Nasdaq futures (NQ=F): +76.50 points (+0.53%) to 14,523.50

• Crude (CL=F): -$0.30 (-0.26%) to $114.63 a barrel

• Gold (GC=F): +$7.30 (+0.38%) to $1,944.60 per ounce

• 10-year Treasury (^TNX): 0.00 bps to yield 2.3210%

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6:14 p.m. ET Wednesday: Stock futures open little changed as market seesaw continues

Here’s where the major stock index futures opened Wednesday evening:

• S&P 500 futures (ES=F): +1.50 points (+0.03%) to 4,449.00

• Dow futures (YM=F): +3.00 points (+0.01%) to 34,253.00

• Nasdaq futures (NQ=F): +14.50 points (+0.10%) to 14,461.50

• Crude (CL=F): -$0.54 (-0.47%) to $114.39 a barrel

• Gold (GC=F): +$7.20 (+0.37%) to $1,944.50 per ounce

• 10-year Treasury (^TNX): -5.2 bps to yield 2.3210%

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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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