However, Western officials were not quick to accept that Russia’s de-escalating behavior was being implied.
The S&P gained 1.6% to 4,471.07 while the Dow rose 1.22% to 34,988.84. The tech-heavy Nasdaq Composite rose 2.5% — its highest level in two weeks.
According to TD Securities analysts, “Markets rose following reports that Russia has returned some troops. This fuels optimism that tensions will ease.”
Analysts caution that, despite the headlines about Russian troop withdrawals this week, there is still a lot of potential for conflict in Eastern Europe.
“The amount of time Russia is willing and able to devote to these efforts remains uncertain,” Raymond James analyst Ed Mills, and Tavis McCourt stated in a February 15 Report. They also said that “ground developments” will be more reliable indicators in days and weeks to come.
In a meeting with President Vladimir Putin, Sergey Lavrov, the Russian Foreign Minister, indicated Monday that Moscow would continue to discuss security concerns that led to the Ukraine crisis.
Russia denies that it intends to invade, but has positioned more than 130,000 troops along Ukraine’s borders. These comments gave hope that war could be avoided, even though Russia denies it plans to invade. However, more than 130,000 troops have been deployed on Ukraine’s borders by the United States and Britain.
After the U.S. announced that it would close its Ukrainian embassy and move all staff to a nearby city, the markets became panicky.
“For the moment, we still see an invasion more likely than not, but are watching for facesaving de-escalation opportunities for Putin,” Height Securities Benjamin Salisbury stated to investors in a report.
Keep an eye on the Reserve
Investors have also been trying to assess how stocks and the wider economy will be affected by Federal Reserve’s move to increase interest rates in an effort to curb inflation.
Wall Street anticipates seven rate increases this year from the central bank, which is expected to raise its benchmark interest rate in March. This comes after Wall Street reported last week that inflation rose 7.5% in January compared with a year ago. It was the fastest increase in 40 years.
Analysts now believe that the Fed may be forced to delay its plans due to the additional threat of disruption from the Ukraine situation.
“With market disruption in the background, increased geopolitical risk could put doubts on Fed’s ability raise the federal funds rates as the situation unfolds. This could potentially scale back expectations for the frequency and rate of rate increases for 2022,” Raymond James analyst Mills and McCourt.
Investors are also interested in the latest round corporate earnings. This is partly to gain a better understanding about how companies deal with high inflation. This week’s most notable U.S. companies that reported earnings include Walmart on Thursday, DoorDash on Wednesday, and Airbnb on Tuesday.
This week will also include updates on inflation and how it might impact consumer spending. On Tuesday, the U.S. Labor Department’s January report on wholesale prices will be released. The Commerce Department’s January retail sales report will be published on Wednesday.
Energy trading saw benchmark U.S. crude oil fall $2.61 to $92.85 a bar in electronic trading on New York Mercantile Exchange. On Monday, it rose 2.5% while natural gas prices rose 6.4%. Russia is a major producer of energy and any military action that disrupts supplies may cause disruptions in markets and global industry. Savi Syth, an analyst at Raymond James on airline matters, said that airlines will feel the effects of higher oil prices.
Brent crude oil, which is the international standard for pricing, fell $2.27 a barrel to $94.21 per barrel.
