Stocks rise, fear drops on Wall Street despite Ukraine invasion

NEW YORK (AP) — Wall Street capped a turbulent week of trading Friday with a broad rally for stocks as relief swept through the market, even as deadly attacks raged in Ukraine. Oil has fallen and investors have turned away from gold and other traditional safe havens they favor when fear is high.

The S&P 500 climbed 2.2% and posted its first weekly gain in three weeks. The benchmark followed a wild Thursday when it went from a 2.6% loss to a 1.5% gain. Stocks swung sharply on uncertainty over the scale of the Russian invasion that will drive up inflation, especially oil and natural gas prices, and dampen the global economy.

These big swings are likely to continue, with so much uncertainty not only about Ukraine but also about interest rates. The Federal Reserve is caught in a delicate dance where it must raise interest rates enough to contain high inflation, but not enough to cause a recession.

On Friday, at least, the mood was calmer. A measure of fear on Wall Street, which shows how worried traders are about upcoming swings in stock prices, fell 9%. Gold fell 2% after bouncing for weeks on concerns over Russia and Ukraine. Treasury yields remained relatively stable, signaling that investors were not seeking safety as they had immediately after the Russian invasion.

“The market acts emotionally when these things happen because it’s so hard to model,” said Mark Hackett, head of investment research at Nationwide.

A US government report showed last month’s inflation was broadly in line with economists’ expectations, although it was still elevated. It also showed that the main driver of the US economy, consumer spending, has strengthened more than economists expected.

“Lost in a lot of focus on Russia, the Federal Reserve and inflation is the fact that the economy is in a pretty strong position,” Hackett said.

Economic reports may be enough to convince the Federal Reserve not to raise short-term rates next month by double their usual increase, at least for now, said Brian Jacobsen, senior investment strategist at Allspring Global Investments. It’s something some Fed officials had suggested, and it’s something investors generally fear because higher rates put downward pressure on all kinds of investments. Regardless of its size, the rate hike would be the first since 2018.

However, all of the newfound calm in global financial markets came amid Russia pushing its invasion of Ukraine to the outskirts of the capital on Friday after unleashing airstrikes on towns and military bases and sent troops and tanks from three sides in what amounts to the largest ground conflict in Europe since World War II.

Still, investors may have been encouraged by examining how past geopolitical crises, including wars, have affected the stock market. Typically, stocks initially come under pressure before conflict erupts, but tend to rally three to six months later, said Zachary Hill, head of portfolio management at Horizon Investments.

Hill said the turning point in the market this week came as investors judged U.S. sanctions against Russia less severe than expected.

“The penalties were not as severe as feared,” he said.

The S&P 500 rose 95.95 points to 4,384.65. The Dow Jones Industrial Average rose 834.92 points, or 2.5%, to 34,058.75. The Nasdaq composite gained 221.04 points, or 1.6%, to 13,694.62 after swinging between modest gains and losses. A day earlier, it briefly fell more than 20% below its all-time high, before suddenly surging again.

Smaller company stocks also posted gains. The Russell 2000 Index rose 44.92 points, or 2.3%, to 2,040.923.

Prices for everything from stocks to Bitcoin have swung wildly on uncertainty over Russia and Ukraine, but perhaps the brightest market spotlight has been oil and natural gas. Russia is one of the world’s largest producers of oil and gas, and European consumers are particularly dependent on it.

Oil prices fell on both sides of the Atlantic, a day after briefly surging above $100 a barrel, on fears that conflict and upcoming sanctions could disrupt supplies. Benchmark U.S. crude slid 1.3% to $91.59 a barrel. Brent crude, the international standard, fell 1.2% to $97.93.

Announcing sanctions against Russia on Thursday that he called tough, President Joe Biden said he “will do everything in my power to limit the pain the American people are feeling at the gas pump. petrol”. This relieved the fact that the sanctions were not as severe as they could have been, and the drop in oil prices helped to push up stocks.

“We are not going to do anything that unintentionally disrupts the flow of energy, as the global economic recovery is still underway,” National Economic Council Deputy Director Daleep Singh said Thursday.

Stocks also rose across much of Europe and Asia on Friday, recouping some of their steep losses immediately after the Russian invasion. London’s FTSE 100 gained 3.9% while France’s CAC 40 rose 3.6% and Germany’s DAX 3.7%.

Market participants could bet the crisis could slow central bank action to calm inflation by raising interest rates and rolling back other support to pandemic-stricken economies, said Ipek Ozkardeskaya of Swissquote. Bank SA.

“But really, it’s about volatility, high volatility that results from a high-tension environment,” Ozkardeskaya wrote in a comment. “It is impossible to say which direction the market will take in the next five minutes.”


AP Business Writer Yuri Kageyama contributed. Veiga reported from Los Angeles.

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