NEW YORK, RAW – US stocks have ended sharply higher, led by a three per cent gain in the Nasdaq, in a dramatic market reversal as US President Joe Biden unveiled harsh new sanctions against Russia after Moscow began an all-out invasion of Ukraine.
The S&P 500 rose more than one per cent on Thursday, ending a four-day slide amid worries over the escalating crisis. The Dow also ended in positive territory.
After consulting counterparts from the G7, Biden announced measures to impede Russia’s ability to do business in the world’s major currencies, along with sanctions against banks and state-owned enterprises.
The White House has warned Americans that the conflict could lead to higher fuel prices in the United States, but US officials have been working with counterparts in other countries on a combined release of additional oil from global strategic crude reserves.
All three major indices sold off early in the day on news of Russia’s invasion of Ukraine, with the Nasdaq down more than three per cent at the open. They hit session highs following Biden’s comments and rallied heading into the close.
“The tough stand the US and Europe is taking is sending a loud message to the financial markets that they’re going to try to cripple as much as they can the Russian economy,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“From one perspective that’s positive,” he said, adding the selling in the market may not be over. “Going forward, we’re still subject to probably higher oil prices, probably higher commodity prices.”
Investors have been worried about how increasing inflation will affect the outlook for the Federal Reserve and higher interest rates.
The information technology sector rose 3.5 per cent and gave the S&P 500 its biggest boost, in a reversal from recent action.
The Dow Jones Industrial Average rose 92.07 points, or 0.28 per cent, to 33,223.83, the S&P 500 gained 63.2 points, or 1.50 per cent, to 4,288.7 and the Nasdaq Composite added 436.10 points, or 3.34 per cent, to 13,473.59.
Early in the session, the Nasdaq was down more than 20 per cent from its November closing record high. If it had closed at that level, it would have confirmed it was in a bear market.
“Tech had the most technical damage, so it’s good to see tech pick up the pieces,” said Jamie Cox, managing partner of Harris Financial Group in Richmond, Virginia.
The S&P 500 earlier this week confirmed that it was in a correction. A correction is confirmed when an index closes 10 per cent or more below its record closing level.
The CBOE Volatility index, known as Wall Street’s fear gauge, ended lower on the day.