The New York Stock Exchange ended its best session of the year with a strong rebound on Wednesday, helped by a sharp drop in oil prices as the opening of diplomatic dialogue in the Ukrainian crisis offered a glimmer of hope.
According to final results at the close, the Dow Jones index climbed 2.00% to 33,285.09 points. The Nasdaq jumped 3.59% to 13,255.55 points. The S&P 500 rose 2.57% to 4,277.86 points.
The violent fall in the price of a barrel, which had exceeded 130 dollars for Brent in recent days because of the war in Ukraine and the sanctions against Russia, a major oil producer, “helped to give respite to the markets shaken by the concerns about inflation and uncertainty about the pace of Fed rate hikes,” Schwab analysts said.
A barrel of North Sea Brent crude for May delivery fell 13.15% to end at $111.14, while US West Texas Intermediate (WTI) for April delivery fell 12.12% , at $108.70.
Risk appetite was back, deepened by relative progress in negotiations between Ukraine and Russia, two weeks after the start of the Russian invasion.
Turkey welcomes the Russian and Ukrainian foreign ministers on Thursday for their first face-to-face since the start of the Russian offensive in Ukraine.
Russia has seen “progress” in negotiations with Ukraine, Russian Foreign Minister Maria Zakharova said on Wednesday.
For his part, the Ukrainian head of state Volodymyr Zelensky affirmed that “compromises (could) be made”.
Compromises are “the only way out of this situation,” Zelensky added.
“The fall in oil but also in commodities and metals has given a spark to the market,” commented Peter Cardillo, chief analyst for Spartan Capital.
But according to him, the decline in the price of black gold is only “a temporary factor”.
“Even if a truce were to be announced soon, the sanctions will probably remain imposed on Russia, causing disruptions in terms of the flow of gas to Europe,” added the expert.
Despite Wednesday’s strong rebound, “the stock market trough is not over, nor is the peak for oil,” says Mr. Cardillo. “I don’t think we’ve bottomed out yet for equities and we may still make a trip to the lows hit on Monday,” he added.
On Monday, the Dow Jones had slipped to its lowest level in almost a year.
Bond yields tightened again as investors returned to equities, looking for bargains after indices fell in recent days.
Rates on 10-year US Treasury bonds, which move inversely to the price of the bond, climbed to 1.94% against 1.84% the day before.
Safe havens such as the dollar or gold were down. The greenback fell sharply from its peaks against the euro, dropping 1.56% to 1.1069 dollars per euro.
Investors will watch for the monetary meeting of the European Central Bank (ECB) on Thursday.
The Fed is meeting next week and its president Jerome Powell has said he is ready, despite the war and economic sanctions, for a first round of monetary tightening of 0.25%.
Before that, on Thursday, the US government publishes the inflation figure for February.
On the side, the big signboards symbol of America which finally decided Tuesday to cut the bridges with Russia, were variously accommodated like McDonald’s (-0.14%), Coca-Cola (+0.51%) or Starbucks (+4.29%).
General Electric climbed 3.52% to $91.25 after announcing a $3 billion share buyback program.
The information technology (+3.98%) and banking (+3.61%) sectors led the rise.
The airlines have taken to the skies after having been very roughed up in recent sessions. American Airlines jumped 5.85% to $14.30 and United Airlines jumped 9.27% to $34.90.
Cruise lines are also up again solidly by more than 8% like Carnival or Norwegian Cruise.
Bumble, the American dating site, was the darling of the day (+41.90% to 23.64 dollars), after announcing solid results in the 4th quarter and rosy forecasts.