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By Jeffrey
Cane | Wednesday, March 9 Distant
Drums. The
Russian bombardment of Ukrainian cities is taking place more than a thousand
miles away from the exchanges and trading desks of Frankfurt and London. The
war appeared to be even more distant in the minds of investors there and in
the United States today. Stocks roared back from their recent rout,
while crude oil slumped in a session that only highlighted the volatility of
this post-invasion time. It was not entirely clear why the risk-on
light got switched on today. European markets were particularly strong.
Germany's DAX index closed up 7.9%, its
biggest one-day gain since March 2020. The CAC 40
in Paris ended up 7.1%, while the FTSE 100 in London rose 3.3%. A summit meeting of European
Union leaders set for tomorrow in Versailles appeared to have
bolstered investor sentiment. Europe faces severe economic challenges given
its reliance on Russia energy, and the fact that its leaders were even
meeting at this time was "supportive," Gergely
Majoros, investment committee member at the French asset
manager Carmignac, told
the Financial Times. “There are expectations Europe is going
to do something massive,” he said. Crude oil prices staged a sharp retreat after a
three-day rally. Oil futures fell 12%, to $108.70 a barrel. (Oil is still up
nearly 45% year to date.) As investors took on riskier bets, havens
like Treasuries and gold
fell. The yield on the two-year Treasury note rose to 1.676% from 1.627%
yesterday, while the yield on the 10-year rose to 1.946% from 1.870%. Gold
ended its four-session winning streak, sliding 2.7%, to $1985.90 an ounce. The war in Ukraine will of course continue
to have an enormous impact on commodity prices, inflation, and the global
economy. Still, there may have been a recognition that oil spiked too quickly
and stocks tumbled too far this week. "Markets were priced like the Straits
of Hormuz were blockaded, and that was just not reasonable," said Jamie
Cox, managing partner for Harris Financial Group. Today, the S&P 500 surged 2.6%, its best one-day gain since
June 5, 2020. The Dow Jones Industrial Average closed up 2%, while the
Nasdaq
Composite ended up 3.6%, its sharpest daily gain since March
9, 2021. The Russell 2000 rose 2.7%. After the market close, Amazon.com
announced a 20-for-1 stock split and a $10 billion stock-repurchase plan that
would replace a previous $5 billion buyback plan. Its shares were up 7% in
after-hours trading. Eric Savitz of Barron's
has the details here. Online dating companies Bumble
and Match Group, parent of Tinder, surged after Bumble reported
earnings yesterday that showed signs of a post-pandemic rebound. Bumble
soared 41.9%, while Match led the S&P 500 gainers with a 12.8%
advance. Apple's product launch event had few
surprises; still, its stock rose 3.5%. General
Electric announced a $3
billion stock buyback -- its first since 2017. The stock
climbed 3.5%. Banks were stronger. Bank
of America gained 6.4%, JPMorgan Chase,
4%. Travel-related stocks also performed
well: Caesars Entertainment (up
10.5%), Carnival (up 8.7%), Norwegian
Cruise Line (up 8.5%), and United Airlines
(up 8.3%). The biggest losers in the S&P 500 were
all energy: Phillips 66 (down 5.9%), Exxon
Mobil (down 5.7%), and Schlumberger (down 5.6%). The Energy
Select SPDR exchange-traded fund fell 3%. Today was a good day for stocks to rally if
for no other reason than it was the 13th anniversary of the U.S. market's
bottom in the wake of the devastation caused by the financial crisis. On
March 9, 2009, the S&P 500 closed at its lowest level since September
1996. If you bought the index at the bottom on that unpromising March day and
held on to it, you would have had a total return of 721%, according to our
friends at Dow Jones Markets Data. That helps put the recent turmoil in
perspective, Bespoke Investment Group noted
earlier today, saying: As much as sentiment has worsened and as
painful as the declines from the January highs feel now, they are a blip when
viewed in the context of the last 13 years. Just to put things in
perspective, on Monday, the S&P 500 fell more than 2.95% for its worst
one-day decline since October 2020. From September 2008 through March 2009,
though, there were more than 30 one-day declines of 2.95%! And Bespoke had an optimistic takeaway for
investors: Whenever you hear someone say there’s no way
out from here for equities, remember March 2009, March 2020 at the Covid
lows, and every other bear market or correction low. The way out for
the market was never obvious. It never is. |
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DJIA: +2.00% to 33,286.25 The Hot Stock: Match
Group +12.8% Best Sector: Technology +3.96%
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