U.S. stocks trade higher, lifted by optimism about Ukraine talks

What’s driving markets?

Stocks were up Tuesday afternoon as investors seemed encouraged by negotiations aimed at ending the Russia-Ukraine war. 

Talk of a chance for a cease fire “is pumping more optimism into the market,” said Shep Perkins, chief investment officer for equities at Putnam Investments, in a phone interview Tuesday. 

The first face-to-face talks between Russia and Ukraine in two weeks were held in Turkey on Tuesday. Both sides described the negotiations as constructive, though no immediate breakthroughs were produced, The Wall Street Journal reported.

Russia’s military also said Tuesday it would “fundamentally” cut back operations near Ukraine’s capital and a northern city, potentially a significant concession by Moscow since it invaded its neighbor more than a month ago.

“A sense of positivity returned to financial markets as the prospects of more cease-fire talks between Russia and Ukraine soothed investor jitters,” said Lukman Otunuga, senior research analyst at FXTM.

See also: War in Ukraine: New round of talks in Istanbul aims to stop the fighting

The dollar
USDRUB
plunged against the ruble, and oil prices
CL
dropped, as reports began to emerge after the day’s meetings in Istanbul, Turkey.

Although oil prices remain elevated, their decline from even higher levels has taken “a little of the pressure off inflation,” said Putnam’s Perkins. West Texas Intermediate Crude for May delivery
CLK22
was down 2.5% Tuesday afternoon at around a $103 a barrel. 

Meanwhile, wheat futures
W00
dropped Tuesday as traders reacted to news of potential progress in negotiations between Ukraine and Russia. Both countries are significant suppliers of wheat.

See: Wheat futures on track for lowest finish in a month on hopes for progress in Ukraine-Russia talks

In U.S. economic data, the Conference Board’s index of consumer confidence rose to 107.2 in March and increased for the first time in 2022, even as Americans remain uneasy about high inflation and the economic fallout from the war in Ukraine. Economists polled by The Wall Street Journal had forecast the index to rise to 107.5.

Employment trends could be partly behind the improved sentiment, according to Perkins. “The labor market is very strong,” he said. “We know that people are changing jobs, presumably to get raises.”

Data on job openings and labor turnover showed the quitting rate rose to 2.9% in February, from 2.8% in January, according to the U.S. Department of Labor.

Read: Another 4.35 million U.S. workers quit — most for better jobs

In other economic data released Tuesday, the S&P CoreLogic Case-Shiller 20-city house price index posted a 19.1% year-over-year gain in January, up slightly from 18.6% the previous month.

An uptick in 30-year mortgage rates should help cool the hot housing market, according to  Perkins. He said some slowing in home-price growth would be “well received” by the equity market as it would take some pressure off “the inflation picture” broadly worrying investors.

“As the Fed embarks on what appears likely to be an extended rate hike cycle and financial conditions tighten, consumers are increasingly wary of the outlook for the economy in the latter half of the year and into 2023,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors, in emailed comments.

“Can policy makers thread the needle to cool the economy and bring inflation pressures down to a more palatable level without choking off growth? That’s the challenge before the Fed and a tall order for policy makers who will attempt to navigate the economy to a soft landing,” he wrote.

Another major development for the world economy was in China, as a two-phased lockdown of the financial capital Shanghai entered the second day raising the prospect of more supply chain disruptions hitting the world economy.

Which companies are in focus?

• FedEx Corp.
  FDX
  founder Fred Smith late Monday announced plans to step down from the chief executive role, and will be replaced by the logistics company’s president and chief operating officer. FedEx shares rose 3.1%.

• Shares of Robinhood Markets Inc.
  HOOD
  jumped more than 26% after the trading app said it would extend the hours that its customers could trade and was working toward 24/7 trading.

• Shares of popular meme stock GameStop Corp.
  GME
  fell 5.7%, on track to snap a record-matching 10-day winning streak.

• UnitedHealth Group Inc.’s
  UNH
  Optum Health confirmed it would buy post-acute healthcare services company LHC Group
  LHCG
  in a deal that values LHC Group at more than $5.5 billion. LHC Group shares were up 6.3%, while shares of UnitedHealth edged down 0.6%.

• Shares of Dave & Buster’s Entertainment Inc.
  PLAY
  jumped 13.8% after the games-themed restaurant chain’s quarterly results released late Monday fell below Wall Street expectations.

• Nielsen Holdings PLC
  NLSN
  shares surged 20.9%, after the audience measurement company confirmed a deal to be acquired by a private equity consortium in a cash deal valued at about $16 billion, including debt.

• NeoGenomics Inc.
  NEO
  Chief Executive Mark Mallon stepped down Monday as the health-testing company revealed that first-quarter financials will miss guidance and rescinded its forecast for the full year. Shares plunged 28%.

How are other assets faring?

• The yield on the 10-year Treasury note
  BX:TMUBMUSD10Y
  was down about 8 basis points at around 2.4%. Yields and debt prices move opposite each other.

• The ICE U.S. Dollar Index
  DXY,
  a measure of the currency against a basket of six major rivals, fell 0.6%.

• Bitcoin
  BTCUSD
  fell 1.1% to trade at $47,418.

• In European equities, the Stoxx Europe 600
  XX:SXXP
  closed 1.7% higher, while London’s FTSE 100
  UK:UKX
  gained 0.9%.

• In Asia, the Shanghai Composite
  CN:SHCOMP
  fell 0.3%, while the Hang Seng Index
  HK:HSI
  in Hong Kong and Japan’s Nikkei 225
  JP:NIK
  each rose 1.1%.

––Steve Goldstein contributed to this report.