Stocks are jumping, and oil prices are easing Wednesday as the big swings shaking global markets go in both directions amid uncertainty about the war in Ukraine.
The S&P 500 was 2.3% higher in morning trading, following a four-day losing streak that had pulled it 13% below its record set early this year.
The Dow Jones Industrial Average was up 648 points, or 2%, at 32,281, as of 10:40 a.m. Eastern time, and the Nasdaq composite was 3.1% higher.
Such big swings have been jerking markets around in recent weeks as investors grope to guess how much economic damage Russia’s invasion of Ukraine will do. The swings have struck not only day-to-day but also hour-to-hour, with some days seeing several big reversals.
The chaotic movements are likely only to continue with uncertainty so high about the war in Ukraine and its ultimate economic fallout. The region is key to markets because it’s a major producer of oil, wheat and other commodities, whose prices have spiked on worries about disruptions to supplies.
Stocks once again moved in the opposite direction of oil prices, with inflation such a dominant worry. Analysts said bargain hunters may be scooping up stocks after concerns about a slowing economy coupled with high inflation triggered their steep recent slide. Many of those buyers appear to be smaller-pocketed, “retail” investors trading on their phones and laptops. And they’re often buying shares that big professional investors are selling.
Last week saw record selling of U.S. stocks by hedge funds, strategist Jill Carey Hall wrote in a recent BofA Global Research report. Retail investors and institutional investors were net buyers.
The moves by retail investors may be a result of people worrying about missing out on any potential rebound. A “buy-the-dip” strategy, where drops in stocks were seen mainly as opportunities to buy low, was very successful following the 2020 crash caused by the coronavirus. The S&P 500 kept climbing from that plummet without a 10% drop until just recently.
Big recent moves for markets also show that prices already reflect a lot of pessimism, with crude oil prices up more than 50% so far in 2022. That may be why crude prices actually receded on Tuesday, after President Joe Biden announced a U.S. ban on imports of Russian oil. A ban will mean disruptions to supplies, but oil traders may already have accounted for it when they briefly pushed the price of U.S. crude above $130 a day before the announcement.
Crude oil prices fell Wednesday, while gold and a measure of nervousness among stock investors on Wall Street also eased. A barrel of U.S. crude oil dropped 4.9% to $117.59. Brent crude, the international standard, fell 5% to $121.57.
European stocks rallied even more than the U.S. market, with Germany’s DAX returning 6.7% and France’s CAC 40 up 6%. Asian markets mostly fell, though, with stocks in Shanghai dropping 1.1% after China’s government said month-over-month consumer price inflation accelerated in February.
On Wall Street, the gains were broad-based. Some of the strongest moves came from airlines, travel companies and other stocks that bounced back from steep drops on worries about fuel costs and the economy.
United Airlines soared 11.6%, though it’s still down nearly 18% for the year so far. Cruise-operator Carnival steamed 10% higher, and Booking Holdings rose 9%.
Among Wednesday’s few decliners were oil-related companies, which lost momentum following big leaps this year on the back of rising crude prices. Halliburton fell 4.7%, though it’s still up roughly 53% for 2022.
Such swings have been particularly wide in markets for commodities because Russia is the No. 2 oil exporter and the No. 3 supplier of nickel, which is used in electric car batteries, stainless steel and other products. Russia and Ukraine also are among the biggest global sellers of wheat.
Less than a week after removing from Russia its list of nations deemed a safe place to invest, Fitch cut its credit rating on the nation further into junk status and warned of an imminent default on sovereign debt.
Treasury yields climbed as an anticipated increase in interest rates by the Federal Reserve nears. The Fed’s policy-making committee is meeting next week, and the wide expectation is that it will vote to raise its benchmark short-term rate by a quarter of a percentage point. It would be the first such increase since 2018.
The Fed is facing a delicate and increasingly tough task as it moves to raise rates through 2022, which tends to slow the economy. The central bank wants to pull rates high enough to push down inflation, which is at its highest level in generations. But it doesn’t want to raise them so much that it causes a recession.
The yield on the 10-year Treasury rose to 1.91% from 1.86% late Tuesday.
The value of bitcoin rallied more than 9% and was back above $42,000 after Biden signed an executive order on government oversight of cryptocurrency. Crypto players have increasingly been saying they welcome increased regulation, and they want to have a hand in shaping it.
Originally published on MarketBeat.com
AP Business Writer Joe McDonald contributed.