Market Snapshot: Dow ends 600 points higher as Powell affirms March rate liftoff, vows to stay nimble as Ukraine crisis unfolds

How did stock benchmarks end?

The Dow Jones Industrial Average
DJIA,
+1.79%
rose 596.40 points, or 1.8%, ending at 33,891.35.

The S&P 500 index
SPX,
+1.86%
climbed 80.28 points, or 1.9%, closing at 4,386.54, as each of the broad-market benchmarks sectors advanced.

The Nasdaq Composite Index
COMP,
+1.62%
rose 219.56 points, or 1.6%, finishing at 13,752.02, after hitting an intrasession nadir at 13,493.90.

On Tuesday, the Dow fell nearly 600 points, or 1.8%, while the S&P 500 and Nasdaq Composite each slid 1.6%.

What drove the market?

Stocks erased sharp losses from a day earlier after Fed Chairman Powell testified that it would be appropriate for the central bank to raise its benchmark interest rate, currently in a range between 0% and 0.25%, at its meeting in two weeks. Powell said he supported a 25 basis point increase, rather than a larger 50 basis point increase, and would propose such a move when the Fed convenes its two-day meeting mid March.

Fed-fund futures were pricing in a near-zero chance that the Fed would raise interest rates by a half-point in March, a dramatic shift from recent weeks. The 10-year Treasury rate
TMUBMUSD10Y,
1.875%
shot higher to 1.862%, marking its biggest daily gain in two years, with the advance for stocks led primarily by the S&P 500’s energy
SP500.10,
+2.22%
and financials
SP500.40,
+2.55%
sectors.

Powell’s testimony “did clarify his and the Fed’s approach to withdrawing stimulus in 2022 amid increased uncertainty from the Russia-Ukraine conflict,” said Bill Adams, chief economist at Comerica Bank, in written comments, adding that Powell sees the maximum employment part of his mandate as largely fulfilled.

“With inflation at a multidecade high, the Fed is anxious to get off of a crisis footing,” Adams said, while also looking to “cool demand enough to get inflation under control, but not choke off the recovery.” 

However, St. Louis Fed President James Bullard said the central bank needs to adopt a more aggressive monetary policy stance to combat surging pricing pressures. Bullard, a voting member of the rate-setting Federal Open Market Committee this year, has consistently called for an aggressive approach to monetary tightening.

Comments from monetary policy makers come as investors also watched headlines from the seventh day of conflict in Ukraine that has seen Russian forces step up shelling of civilian areas.

Moscow continued to pound Ukraine’s second-largest city, Kharkiv, on Wednesday, with both sides indicating they were ready to resume talks to end the fighting. The U.N. General Assembly voted on Wednesday to condemn Russia’s Ukraine invasion, while calling for an immediate end to the clashes.

Surging energy prices also were in focus, with U.S. crude oil prices
CLJ22,
+7.73%
settling at $110.60 a barrel on the New York Mercantile Exchange, the highest level in about 11 years, according to FactSet data.

The U.S. and other countries in the International Energy Agency agreed on Tuesday to release 60 million barrels of oil from their emergency reserves, to help with any supply shortfall caused by Russia’s invasion of Ukraine. Also, OPEC+, made up of the Organization of the Petroleum Exporting Countries and its allies, including Russia, offered no surprises at its monthly meeting, quickly agreeing to boost production in April by another 400,000 barrels a day.

“Weather is in our favor over the next few weeks,” said John Carey, director of equity income at Amundi US, in a phone interview, of higher energy costs. “It’s still cold, but at a certain point over the next few weeks, the weather will warm up, so it may not be such an acute problem than it would have been a month ago.”

Even so, Carey said it remains difficult to know how to position a portfolio, given uncertainties around how far Putin intends to take his attack on Ukraine. “I think there will be continued volatility like the swings we are seeing in the market, one day to the next.”

President Joe Biden delivered an optimistic State of the Union speech on Tuesday evening, saying that America is “stronger today than we were a year ago,” even as war rages on in Eastern Europe and concerns about inflation linger domestically.

See: Zelensky says Putin is now resorting to the tactics of a terrorist in Ukraine offensive

In economic reports, the Fed’s Beige Book survey of economic activity showed modest expansion in the final weeks of last year on continued supply-chain disruptions and labor shortages, but also a pullback in leisure travel due to the omicron variant.

The private sector added 475,000 new jobs in February, payroll processor ADP said — after omicron faded, governments eased pandemic restrictions and the economy perked up. Economists surveyed by The Wall Street Journal had forecast a 400,000 increase.

Which companies were in focus?

CVS Health Corp.
CVS,
+2.33%,
Walgreens Boots Alliance Inc.
WBA,
+2.53%
and Walmart Inc
WMT,
+0.13%.
shares were in focus Wednesday after they said stores will participate in Biden’s test-to-treat COVID-19 program, at no costs. Shares rose 2.3%, 2.5% and 0.1%, respectively.

Shares of Nordstrom
JWN,
+37.82%
 rose Wednesday after the retailer said it earned $1.23 a share on revenue that rose more than 23% to $4.38 billion. Analysts were looking for earnings per share of $1 on revenue of $4.36 billion. Its stock gained almost 38%.

Ford Motor Co.’s stock
F,
+8.38%
was in focus after it reported U.S. auto sales of 129,273 vehicles, down 20.9% from a year ago. It also said it would split its electric-vehicle unit from its legacy automobile manufacturing. Shares advanced 8.4%.

Shares of electric-vehicle maker Rivian Automotive
RIVN,
-13.49%
fell 13.5% after it said it was raising prices to help the startup offset higher costs of production.

Shares of banking giant Citigroup
C,
+1.66%
gained 1.7% as its CEO Jane Fraser outlined a three-phase plan to streamline operations and improve returns. The plan comes one year after Fraser became chief executive of the global institution.

How did other assets fare?

The ICE U.S. Dollar Index DXY fell 0.1%.

Gold futures for April delivery GCJ22 closed down 1.1% to settle at $1,922.30 an ounce after a 2.3% rise a day ago, which brought it to its highest settlement since January 2021, according to FactSet data.

Bitcoin BTCUSD fell 0.8% to around $43,900.

The Stoxx Europe 600 SXXP closed 0.9% higher, while London’s FTSE 100 UKX finished 1.5% higher.

In Asia, the Shanghai Composite SHCOMP ended 0.1% lower, while the Hang Seng Index HSI closed down 1.8% in Hong Kong and Japan’s Nikkei 225 NIK declined 1.7%.

—-Barbara Kollmeyer contributed to this article