Stocks rallied Friday for a second day in a row as traders eyed the latest developments in Russia’s invasion of Ukraine and the world’s response.
The S&P 500 advanced more than 2%, rising further after a 1.5% jump on Thursday. The Dow and Nasdaq also built on Thursday’s gains to add more than 1% intraday on Friday. The Dow closed up by more than 800 points, or 2.5%, posting its best day of 2022. The Nasdaq ended higher by more than 200 points, or 1.6%. The move came after new economic data showed U.S. personal spending rose more than expected in January, even accounting for a surge in inflation. Personal consumption expenditures (PCE), a closely watched gauge of inflation, soared by 6.1%, or the fastest rate in 40 years.
Stocks moved higher even against the backdrop of Russia’s military attack of Ukraine and Western nation’s sanctions on Russia. Though equities have been sliding and energy commodity prices soaring in recent sessions as investors considered the financial market impacts of the conflict, markets at least temporarily stabilized in absence of further evidence of U.S. economic damage.
“The market is going to overreact to good news and bad. The news [Thursday] morning was sell, sell, sell,” Allan Boomer, Momentum Advisors chief investment officer, told Yahoo Finance Live on Thursday. “And now we analyzed the news … I think what the market has decided is that this Ukraine-Russia [situation] is a tragedy, [but] it’s not necessarily a global event that’s going to cause us to fall into a deep recession.”
“I think the biggest factor right now is the Fed,” he added. “And if anything, this Russian event may make the Fed a bit less hawkish.”
And indeed, market participants have now priced in a much lower probability that Federal Reserve officials will front-load their interest rate hiking cycle and raise rates by 50 basis points at the end of their March meeting. The last time the Fed raised rates by more than 25 basis points in one meeting was in 2000. While such a move would serve as an aggressive shift by the Fed to begin actively reining in inflation, it…