Dow surges nearly 800 points and aims for best day in over a year as Nasdaq, S&P 500 erase weekly losses and angst over Russia-Ukraine clash gives way to buying - MarketWatch
S E E D E D C O N T E N T
Last Updated: Feb. 25, 2022 at 2:43 p.m. ET First Published: Feb. 24, 2022 at 8:31 p.m. ET
Christine Idzelis and Mark DeCambre
S&P 500, Nasdaq erase weekly loss
(Photo by Spencer Platt/Getty Images)
Referenced Symbols
DJIA +2.18%SPX +1.81%COMP +1.03%TSLA +0.08%JNJ +5.04%NIK +1.95%
U.S. stock benchmarks led by the Dow Jones Industrial Average were trading sharply higher Friday, as investors who were cautious about buying at the onset of the military clash in Eastern Europe turned eager to hunt down bargains.
The upbeat tone on the markets appears to be tied to reports that Russia was in favor of talks with Ukrainian leadership. However, Moscow's military force was on display as it pressed toward the capital of Ukraine.
How are stock indexes trading ?
- The Dow Jones Industrial Average DJIA, +2.18% gained 823 points, or 2.5%, to trade at 34,047, which puts blue chips on track for the best daily gain since early November of 2020.
- The S&P 500 SPX, +1.81% rose 91 points, or 2.1%, to trade around 4,380.
- The Nasdaq Composite Index COMP, +1.03% added 175 points, or 1.3%, to trade at 13,648.
- For the week, the Dow was on track for a 0.1% decline, while the S&P 500 and Nasdaq Composite were each looking at a 0.7% weekly advance, as the benchmarks wiped out losses from earlier in the week.
For more: Complete MarketWatch coverage of the Russian invasion of Ukraine
On Thursday, the Dow snapped a five-session losing streak, closing up 92.07 points, or 0.3%, at 33,223.83, after falling as far as 2.6% in morning trading. The S&P 500 climbed 1.5%, while the Nasdaq Composite rose 3.3%, also erasing a huge tumble.
What's driving the market?
What a difference two days can make as stocks gained altitude on the back of news reports, citing a summary of a call between Russian President Vladimir Putin and Chinese leader Xi Jinping provided by China's Foreign Ministry, which said Russia was ready to conduct negotiations with Ukraine.
The reports come as Russian forces were closing in on Ukrainian capital Kyiv, which had been under fire earlier Friday.
On Thursday, President Joe Biden announced a new wave of sanctions against Russia, in an attempt to isolate Moscow from the global economy. The White House also authorized more U.S. troops to be stationed in Germany. But the U.S. and its allies spared Russia's oil exports and avoided blocking access to the Swift global payment network.
"The latest Western sanctions on Russia will hit its economy hard through tighter financial conditions and reduced trade, and might plausibly hit GDP by 1-2%-pts," William Jackson, Chief Emerging Markets Economist, at Capital Economics wrote in note. "But sanctions stopped short of the more damaging scenario — both for Russia and Europe — in which Russia's energy exports are targeted. For most countries, the main economic impact of the crisis will come through higher commodity prices and the impact on inflation."
See: Ketanji Brown Jackson, Biden's Supreme Court pick, once sided with Trump on his border wall
Investors might be hoping that the Ukrainian crisis could slow moves by central banks to raise interest rates to combat inflation, said Ipek Ozkardeskaya of Swissquote Bank SA, in a note. But "the only certainty is uncertainty, and this is how it will be for the next couple of sessions unfortunately," he said.
Crude prices came off Thursday's highs after rising above $100 a barrel during intraday trading for the first time since 2014.
Need to Know: Why the energy shock from Russia's invasion of Ukraine won't wreck the stock market
Larry Adam, chief investment officer at Raymond James, said by phone Friday that he'll be watching for signs of potentially higher commodity prices stemming from Russia's attack on Ukraine. For example, consumer spending could be hurt should gas prices in the U.S. rise to an aggregate average of more than $4 a gallon, he said.
But the U.S. economy "remains strong," he said. "Consumer spending remains resilient."
U.S. economic data released Friday showed Americans sharply increased spending by 2.1% in January, exceeding expectations. Spending had fallen in December for the first time in 10 months amid fears surrounding the omicron variant of the coronavirus.
Meanwhile, the Federal Reserve's favorite inflation calculator rose by 0.6% in January and showed the biggest yearly increase since 1982, underscoring why the central bank is poised to raise interest rates for the first time in four years.
In other economic data, orders for durable goods rose 1.6% in January, the government said Friday. Economists had forecast a 0.8% rise in orders for durable goods — products made to last at least three years.
Business spending is "very strong," said Adam.
In other economic reports, a final reading of U.S. consumer sentiment for February from the University of Michigan rose slightly to 62.8. The index registered 61.7 earlier in the month after a preliminary survey, marking the lowest level in more than 10 years.
Also, U.S. pending home sales fell a sharp 5.7% in January, according to a monthly index released by the National Association of Realtors on Friday. Economists polled by The Wall Street Journal expected pending home sales to rise 1%.
Which companies are in focus?
- Shares of Tesla Inc . TSLA, +0.08%were in focus Friday after Daiwa Capital analyst Jairam Nathan said it is finally time to start buying again, as supply chain concerns and rising oil prices weigh on legacy auto makers. Its stock was up 0.3%.
- Johnson & Johnson JNJ, +5.04% and three major distributors completed nationwide settlements over their role in the opioid addiction crisis Friday. The drugmaker's stock rose over 5%.
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Once again the nabobs of negativity got it all wrong!
Investors are sweeping to swoop up bargain stocks.
Like what?
As they say...buy low, sell high.
Soon as Putin takes Kiev and seizes the Ukrainian government I am sure Russia will be happy to tell Ukrainians what the terms are. Negotiations, they must be joking.
A normal day at the stock markets is now something to crow about?
Probably has more to do with Biden refusing to boot Russia out of Swift than anything else...
It wasn't a normal day, by any stretch, but it was just one day.
Meanwhile food prices continue to rise, energy prices continue to rise, inflation continues to rise, etc, etc ..... but the market went up 800 points yesterday .....lol!
The market was oversold. Temporary dead cat bounce.