Markets swung remarkably to the positive beginning mid-day today, as a press conference with President Biden discussing the Russian invasion brought a sense of hope to the trading floor. The Nasdaq came roaring back from -3.5% at its lows to +3.34% at the close, while the Dow, -859 points at its intra-day low, finished +0.28% in the green, +92 points. The S&P 500 and the small-cap Russell 2000 came in +1.50% and +2.62%, respectively.
Aside from reiterating that the U.S. would not be engaged in conflict with Russia in Ukraine, Biden spoke about protecting NATO allies by building up troop bases in surrounding countries. This would both serve to limit the spread of Russian aggression beyond Ukraine and answer some lingering questions regarding U.S. involvement in the turmoil. The U.S. is moving an additional 7000 troops to Germany to help fortify NATO strategies against Russia.
Perhaps what ignited market buying more than anything was a short comment Biden made which inferred this battle in Ukraine will not last long. Instead of a specter of a years-long war with our long-time adversaries, Biden’s comment suggests we may be looking at mere weeks or months, instead. Especially with additional sanctions being levied against Russian oligarchs, banks and high-tech imports. All these are designed to impede the will of the aggressors.
We also may consider what things like soaring oil and gas prices might do to augment the Fed’s decision to raise interest rates six or seven times in 2022, starting with a 50-basis-point hike likely coming on March 16th. Will this latest global challenge cause the Fed to pull back its planned tightening a tad, in order to accommodate regular market flows?
Of course, this brings back the idea that inflation may continue to run hot beyond energy markets, which would bring us back to our original concerns which led to 2022 bearish market sentiment in the first place. Thus, expect some market fluctuation between now and the next Fed meeting two and a half weeks from now. As for today’s relief rally, however, it comes as a real… relief.
That’s not to diminish what we’re hearing from Ukraine on the ground: 57 people have already lost their lives in the two-day war; obviously there is more heartbreak and tragedy to come. Armed conflict is never to be glossed over, especially one that has begun unprovoked by an autocratic leader. But the near-term positive takeaway — at least for us many thousands of miles from the conflict — is that U.S./NATO policy looks to be prepared and in place. We hope this leads to a short burst of wayward action that gets righted quickly — and leads to a real relief rally.
Questions or comments about this article and/or its author? Click here>>
Image: Bigstock
Surprise Relief Rally Lifts Markets Mid-Day
Markets swung remarkably to the positive beginning mid-day today, as a press conference with President Biden discussing the Russian invasion brought a sense of hope to the trading floor. The Nasdaq came roaring back from -3.5% at its lows to +3.34% at the close, while the Dow, -859 points at its intra-day low, finished +0.28% in the green, +92 points. The S&P 500 and the small-cap Russell 2000 came in +1.50% and +2.62%, respectively.
Aside from reiterating that the U.S. would not be engaged in conflict with Russia in Ukraine, Biden spoke about protecting NATO allies by building up troop bases in surrounding countries. This would both serve to limit the spread of Russian aggression beyond Ukraine and answer some lingering questions regarding U.S. involvement in the turmoil. The U.S. is moving an additional 7000 troops to Germany to help fortify NATO strategies against Russia.
Perhaps what ignited market buying more than anything was a short comment Biden made which inferred this battle in Ukraine will not last long. Instead of a specter of a years-long war with our long-time adversaries, Biden’s comment suggests we may be looking at mere weeks or months, instead. Especially with additional sanctions being levied against Russian oligarchs, banks and high-tech imports. All these are designed to impede the will of the aggressors.
We also may consider what things like soaring oil and gas prices might do to augment the Fed’s decision to raise interest rates six or seven times in 2022, starting with a 50-basis-point hike likely coming on March 16th. Will this latest global challenge cause the Fed to pull back its planned tightening a tad, in order to accommodate regular market flows?
Of course, this brings back the idea that inflation may continue to run hot beyond energy markets, which would bring us back to our original concerns which led to 2022 bearish market sentiment in the first place. Thus, expect some market fluctuation between now and the next Fed meeting two and a half weeks from now. As for today’s relief rally, however, it comes as a real… relief.
That’s not to diminish what we’re hearing from Ukraine on the ground: 57 people have already lost their lives in the two-day war; obviously there is more heartbreak and tragedy to come. Armed conflict is never to be glossed over, especially one that has begun unprovoked by an autocratic leader. But the near-term positive takeaway — at least for us many thousands of miles from the conflict — is that U.S./NATO policy looks to be prepared and in place. We hope this leads to a short burst of wayward action that gets righted quickly — and leads to a real relief rally.
Questions or comments about this article and/or its author? Click here>>