Stocks Rise as Oil Erases Gains; Bonds Fluctuate: Markets Wrap

(Bloomberg) -- Stocks advanced as crude oil erased its rally, with investors weighing the impact of volatile commodity prices on inflation and economic growth.

The S&P 500 rose for a second straight day, while Treasuries were little changed. West Texas Intermediate crude retreated after touching its highest since 2008. Commodity markets have been upended by the Ukraine war as big companies withdraw from Russia, lenders pull back from financing deals and the threat of new sanctions deters buyers.

Treasuries reached “extreme overbought territory” prior to Wednesday’s rebound in yields, according to JPMorgan Chase & Co. strategists. On a technical basis, the bank’s strategists still view the bear market as intact and expect the 10-year yield to exceed 2% in the months ahead.

Federal Reserve Chair Jerome Powell returns to Capitol Hill for the second day of his semi-annual testimony to U.S. lawmakers, this time before the Senate Banking Committee. He told a House panel Wednesday that he’ll propose a 25 basis-point increase when the central bank meets March 15-16 to kick off a series of hikes amid hot inflation. He also cautioned that Russia’s attack has fogged the outlook, and that means officials will proceed with care. 

Follow Fed Chair Powell’s Senate Testimony in Real Time: TOPLive

Comments:

• “There has been a lot of daily volatility which I don’t expect to subside,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “Even if volatility will remain heightened, we are not worried for a recession. I believe there will be a growth slowdown, specifically because of heightened global commodity prices.”
• “Considering oversold conditions, a high equity risk premium, backwardation in energy, vol, and yields, and extremes in hedges, risk assets should rebound if things improve. This is a skew trade not a hope trade,” wrote Dennis DeBusschere, founder of 22V Research.
• “Policy makers are facing an unenviable situation over the near-term; inflationary pressures are mounting while the broader outlook grows more uncertain by the day,” wrote Deutsche Bank strategist Jim Reid.

Read: Latest developments on the war in Ukraine

Jobless claims fell by more than forecast to the lowest level since the start of the year, as Covid-19 cases decline and restrictions ease. The data come ahead of the government’s monthly employment report, which is currently forecast to show the U.S. added 415,000 jobs in February.

Read: Rapid Wage Growth in U.S. Isn’t Going Anywhere Any Time Soon

What to watch this week:

• U.S. unemployment, nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.4% as of 9:57 a.m. New York time
• The Nasdaq 100 rose 0.2%
• The Dow Jones Industrial Average rose 0.6%
• The Stoxx Europe 600 fell 0.6%
• The MSCI World index rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.3% to $1.1082
• The British pound fell 0.3% to $1.3371
• The Japanese yen was little changed at 115.63 per dollar

Bonds

• The yield on 10-year Treasuries was little changed at 1.88%
• Germany’s 10-year yield advanced four basis points to 0.07%
• Britain’s 10-year yield advanced nine basis points to 1.35%

Commodities

• West Texas Intermediate crude fell 0.8% to $109.74 a barrel
• Gold futures rose 0.5% to $1,931.20 an ounce

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