U.S. and Canadian stocks rose on Tuesday, with the Dow and S&P 500 notching their fourth straight session of gains, on optimism some progress was being made toward a deal to resolve the conflict between Russia and Ukraine. It was the highest close ever for the TSX, which was aided by a boost in technology shares.
The S&P/TSX composite index ended up 109.39 points, or 0.5%, at 22,087.22, eclipsing last Tuesday’s peak of 22,074.35. E-commerce company Shopify Inc, which has one of the largest weightings on the TSX, rose 5.8%. The technology group gained 3% and consumer discretionary ended 2.5% higher.
Russia pledged to cut down on military operations around Kyiv and in northern Ukraine, while Ukraine proposed adopting a neutral status, the first sign of progress toward peace in weeks.
Prices eased for oil and other commodities, helping calm concerns about rising inflation and the path of monetary policy by the Federal Reserve, which has started hiking interest rates to combat rising prices.
“If you look over the course of the month this war has been going on, the market has priced in much more bad news than good news,” said Art Hogan, chief market strategist at National Securities in New York.
“It certainly shows the market has a natural coiled spring that will be a reaction function to any good news and we saw a bit of that this morning, but everything will have to be taken with a grain of salt and we will have to see things actually play out versus being actually talked about.”
The Dow Jones Industrial Average rose 338.3 points, or 0.97%, to 35,294.19, the S&P 500 gained 56.08 points, or 1.23%, to 4,631.6 and the Nasdaq Composite added 264.73 points, or 1.84%, to 14,619.64.
After a dismal start to the year for stocks that saw the S&P 500 fall into a correction, commonly referred to as a drop of more than 10% from its most recent high, the benchmark index is now down less than 3% on the year.
Still, there were signs of market nervousness that the Fed could make a policy mistake that leads to a slowdown, or possibly a recession, in the economy as the widely tracked U.S. 2-year/10-year Treasury inverted for the first time since September 2019.
“While I think the ultimate result of an aggressive Fed tightening cycle is a recession, I do not expect it to occur quickly. Historically speaking, all recessions are preceded by 2s10s inversions, but not all inversions result in recessions,” said Ellis Phifer, managing director, fixed income research, at Raymond James in Memphis, Tennessee.
After slumping more than 2% on Monday, the S&P energy index was the only declining sector as crude prices fell more than 1%.
Brent crude settled down $2.25, or 2%, at $110.23 a barrel, while U.S. West Texas Intermediate (WTI) crude was down $1.72, or 1.6%, at $104.24. Both benchmarks fell 7% on Monday and dropped as much as 7% again early on Tuesday before bouncing off session lows.
New lockdowns in Shanghai to curb rising coronavirus cases also pressured prices on Tuesday as the market worried about a falloff in Chinese demand. Shanghai accounts for about 4% of China’s oil consumption, ANZ Research analysts said.
Lockdowns have dampened consumption of transportation fuels in China to a point where some independent refiners are trying to resell crude purchased for delivery over the next two months, traders and analysts said.
As the conflict in Ukraine has escalated in recent weeks, already rising prices saw more upward pressure on commodities such as wheat, energy and metals.
But even with the recent surge in inflation, data on Tuesday showed U.S. consumer confidence rebounded from a one-year low in March, while the current labor environment favors workers.
Real estate, up nearly 3% on the session, was the best performing sector in the U.S., which indicates some investors may see inflation remaining but no recession on the horizon. It was the biggest one-day percentage gain for the group since Jan. 28.
FedEx Corp gained 3.70% after the global delivery conglomerate named operating chief Raj Subramaniam as its top boss.
Volume on U.S. exchanges was 13.22 billion shares, compared with the 14 billion average for the full session over the last 20 trading days. Advancing issues outnumbered declining ones on the NYSE by a 4.20-to-1 ratio; on Nasdaq, a 2.97-to-1 ratio favored advancers. The S&P 500 posted 51 new 52-week highs and no new lows; the Nasdaq Composite recorded 71 new highs and 38 new lows.
Reuters, Globe staff
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