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The S&P 500 and Nasdaq Composite bounced back on Monday, while Dow industrials looked to hold a slight gain, as investors assessed the prospect that Russia might be willing to accept less from Ukraine in ceasefire talks than previously expected.
What’s happening
-
The Dow Jones Industrial Average
DJIA,
+0.27%
rose 6 points, or less than 0.1%, to 34,867. -
The S&P 500
SPX,
+0.71%
rose 21 points, or 0.5%, to trade at 4,565. -
The Nasdaq Composite
COMP,
+1.31%
was up 155 points, or 1.1%, at 14,323.
The Dow, S&P 500 and Nasdaq Composite all registered gains last week, and each notched their best two-week percentage gains since March 2021, November 2020, and April 2020, respectively.
Read: Larry Fink says globalization is over — Here’s what it means for markets
What’s driving markets
The market remains focused on developments surrounding Russia’s invasion of Ukraine. On Monday, the Financial Times reported that Russia is no longer demanding Ukraine be “denazified” in ceasefire talks, giving investors reason for optimism that Russian President Vladimir Putin might be willing to settle for less in ceasefire talks than he previously expected.
Russia has tried to justify its invasion of Ukraine, by claiming without evidence that the democratic country is run by fascists. Talks between the two sides are due to resume in full in Turkey on Tuesday. Ukraine President Volodymyr Zelensky has said that Ukraine could declare neutrality and offer security guarantees to Russia.
Read: Zelensky pushes peace ‘without delay,’ and wants to talk to Putin face-to-face
Late last week, Moscow signaled it was shifting its war aims to focus on the eastern half of the country, though Russian forces continued to rain missiles on Ukrainian cities, news reports said. Western officials saw few signs that Russia was willing to seek a peaceful resolution, The Wall Street Journal reported earlier on Monday.
“If you think about how the equity market is trading, it’s pricing in some resolution to the Russia-Ukraine conflict,” Jack McIntyre of Brandywine Global Investment Management said by phone. “If Russia Ukraine becomes less of an issue, the focus is going to shift to the Fed and the idea of liquidity being withdrawn.”
Traders were also looking at news from the world’s No. 2 economy, China, which locked down its financial capital, Shanghai, in response to rising COVID-19 cases. West Texas Intermediate crude for May delivery
CLK22,
declined by $7.94, or about 7%, to settle at $105.96 a barrel on the New York Mercantile Exchange on related demand worries.
Bond trading remained volatile, with the yield on the 10-year Treasury
TMUBMUSD10Y,
temporarily moving further above 2.50% before pulling back as buyers returned to government debt. The global bond market is heading for its worst returns since the Marshall Plan was implemented after World War II.
Meanwhile, the yield curve continues to flatten, a potential signal that investors fear an economic slowdown. The 5-year Treasury yield briefly traded above the rate on the 30-year Treasury bond, temporarily inverting that measure of the curve. The 2-year yield remains below the 10-year yield, but a rise above the longer-term rate would be seen as signaling a possible recession.
“Our base case is that the US economy can avoid a recession, lowering the threat of a sustained downtrend in stocks,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note. “Investors should brace for higher rates — including potentially adding exposure to value and financial stocks which tend to outperform as central bank policy tightens — without overreacting by exiting equity markets.”
“We favor selected equity overweight and underweight positions, resulting in a neutral overall stance on the asset class,” he said.
In One Chart: Some stock market ‘complacency creeping in’ after S&P 500’s ‘near-perfect retracement’ of selloff
The S&P 500 needs to close above 4,587.77 to exit a market correction, according to Dow Jones Market Data. The large-cap benchmark entered a correction on Feb. 22, when it closed more than 10% below its record finish from Jan. 3. A correction is defined as a fall of more than 10%, but less than 20%, from a recent peak. An exit would occur when the index rises 10% from its correction low.
See: Perfect contrarian indicator? Jim Cramer declares the bear market is over.
Companies in focus
- Tesla Inc. shares TSLA rose 8.3% after the electric vehicle giant disclosed plans to enable a stock split, which would be the second in two years.
-
Shares of Apple Inc.
AAPL,
+0.50%
were up by less than 0.1% even after a Nikkei Asia report said the company plans to make about 20% fewer iPhone SEs next quarter. -
Netflix Inc.
NFLX,
+1.25%
shares were up 1% even after executives predicted that growth would suffer much more than expected at the beginning of 2022.
Other assets
-
The ICE U.S. Dollar Index
DXY,
+0.38% ,
a measure of the currency against a basket of six major rivals, rose 0.4%. -
Gold futures settled lower for a second straight session, with the contract for April delivery
GCJ22,
-1.83%
falling $14.40, or 0.7%, to settle at $1,939.80 per ounce. -
Bitcoin
BTCUSD,
+4.09%
jumped 4.5% to trade around $48,134. -
The Stoxx Europe 600
SXXP,
+0.14%
ended 0.1% higher, while London’s FTSE 100
UKX,
-0.14%
fell 0.1%. -
The Shanghai Composite
SHCOMP,
+0.07%
ended 0.1% higher and the Hang Seng Index
HSI,
+1.31%
jumped 1.3% in Hong Kong, while Japan’s Nikkei 225
NIK,
-0.73%
fell 0.7%.
— Steve Goldstein contributed to this article.
