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Market Snapshot: Dow logs best day in over a year to end volatile week as angst over Russia’s Ukraine invasion gives way to buying

U.S. stock benchmarks led by the Dow Jones Industrial Average were trading sharply higher Friday, as investors who were cautious about buying at the onset of the military clash in Eastern Europe turned eager to hunt down bargains.

The upbeat tone on the markets was tied at least in part to reports that Russia was in favor of talks with Ukrainian leadership. However, Moscow’s military force was on display as it pressed toward the capital of Ukraine.

How are stock indexes trading?

The Dow Jones Industrial Average
DJIA,
+2.44%

gained 748 points, or 2.3%, to trade at 33,972, with the blue-chip gauge on track for the best daily gain since early November of 2020.

The S&P 500
SPX,
+2.16%

rose 83 points, or 1.9%, to trade around 4,371.

The Nasdaq Composite Index
COMP,
+1.54%

added 172 points, or 1.3%, to trade at 13,646.

For the week, the Dow was on track for a 0.3% decline, while the S&P 500 was up 0.5% and Nasdaq Composite was looking at a 0.7% advance, as the benchmarks wiped out losses from earlier in the week.

For more: Complete MarketWatch coverage of the Russian invasion of Ukraine

On Thursday, the Dow snapped a five-session losing streak, closing up 92.07 points, or 0.3%, at 33,223.83, after falling as far as 2.6% in morning trading. The S&P 500 climbed 1.5%, while the Nasdaq Composite rose 3.3%, also erasing a huge tumble.

What’s driving the market?

Stocks gained altitude on the back of news reports, citing a summary of a call between Russian President Vladimir Putin and Chinese leader Xi Jinping provided by China’s Foreign Ministry, which said Russia was ready to conduct negotiations with Ukraine.

However, the reports came as Russian forces were closing in on Ukrainian capital Kyiv, which had been under fire earlier Friday.

On Thursday, President Joe Biden announced a new wave of sanctions against Russia, in an attempt to isolate Moscow from the global economy. The White House also authorized more U.S. troops to be stationed in Germany, but sthe U.S. and its allies spared Russia’s oil exports and avoided blocking access to the SWIFT global payment network.

“The latest Western sanctions on Russia will hit its economy hard through tighter financial conditions and reduced trade, and might plausibly hit GDP by 1-2%-pts,” William Jackson, Chief Emerging Markets Economist, at Capital Economics wrote in note. “But sanctions stopped short of the more damaging scenario — both for Russia and Europe — in which Russia’s energy exports are targeted. For most countries, the main economic impact of the crisis will come through higher commodity prices and the impact on inflation.”

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Investors might be hoping that the Ukrainian crisis could slow moves by central banks to raise interest rates to combat inflation, said Ipek Ozkardeskaya of Swissquote Bank SA, in a note. But “the only certainty is uncertainty, and this is how it will be for the next couple of sessions unfortunately,” he said.

Crude oil prices came off Thursday’s highs after rising above $100 a barrel during intraday trading for the first time since 2014.

Need to Know: Why the energy shock from Russia’s invasion of Ukraine won’t wreck the stock market

Larry Adam, chief investment officer at Raymond James, said by phone Friday that he’ll be watching for signs of potentially higher commodity prices stemming from Russia’s attack on Ukraine. For example, consumer spending could be hurt should gas prices in the U.S. rise to an aggregate average of more than $4 a gallon, he said. But the U.S. economy “remains strong,” he said. “Consumer spending remains resilient.”

U.S. economic data released Friday showed Americans sharply increased spending by 2.1% in January, exceeding expectations. Spending had fallen in December for the first time in 10 months amid fears surrounding the omicron variant of the coronavirus.

Meanwhile, the Federal Reserve’s favorite inflation calculator rose by 0.6% in January and showed the biggest yearly increase since 1982, underscoring why the central bank is poised to raise interest rates for the first time in four years.

In other economic data, orders for durable goods rose 1.6% in January, the government said Friday. Economists had forecast a 0.8% rise in orders for durable goods — products made to last at least three years.

Business spending is “very strong,” said Adam.

A final reading of U.S. consumer sentiment for February from the University of Michigan rose slightly to 62.8. The index registered 61.7 earlier in the month after a preliminary survey, marking the lowest level in more than 10 years.

Also, U.S. pending home sales fell a sharp 5.7% in January, according to a monthly index released by the National Association of Realtors on Friday. Economists polled by The Wall Street Journal expected pending home sales to rise 1%.

The U.S. economy is “healthy,” which is important to the Federal Reserve as it moves toward lifting its benchmark interest rate from near zero to fight inflation, according to Olivier Sarfati, head of equities at GenTrust.

At this stage of the geopolitical conflict, “I don’t think Ukraine would derail the Fed,” Sarfati said by phone Friday. “I’m expecting a rate hike in March.”

Which companies are in focus?

Shares of Tesla Inc.
TSLA,
+1.03%

were in focus Friday after Daiwa Capital analyst Jairam Nathan said it is finally time to start buying again, as supply chain concerns and rising oil prices weigh on legacy auto makers. Its stock was up around 0.6%.

Johnson & Johnson
JNJ,
+4.97%

and three major distributors completed nationwide settlements over their role in the opioid addiction crisis Friday. The drugmaker’s stock rose about 5.1%.

How are other assets faring?

The 10-year benchmark Treasury note yield BX:TMUBMUSD10Y rose more than 1 basis point Friday to 1.984%. For the week, yields rose 5.4 basis points based on 3 pm Eastern Times level, according to Dow Jones Market Data. Treasury yields and prices move in opposite directions.

The U.S. dollar was down 0.5%, as gauged by the ICE U.S. Dollar Index DXY.

In oil futures, West Texas Intermediate crude CLJ22 fell 1.3% Friday to settle at $91.59 a barrel. For the week, the U.S. benchmark for crude climbed 1.5%.

Gold GC00 fell 2% to settle at $1,887.60 an ounce on Friday for a weekly loss of 0.6%.

The Stoxx Europe 600 SXXP closed 3.3% higher, but put in a 1.6% weekly decline, while London’s FTSE 100 UKX surged 3.9%, bringing its weekly loss to 0.3%.

In Asia, the Hang Seng HSI in Hong Kong declined by 0.6% and finished 6.4% lower for the week and China’s Shanghai Composite Index SHCOMP rose 0.6% on the day but notched a 1.1% weekly decline. Japan’s Nikkei 225 Index
NIK,
+1.95%

was up nearly 2% on Friday.

—Clive McKeef contributed to this article.

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