By Geoffrey Smith
Investing.com — U.S. stock markets opened with a modest bounce on Wednesday, recouping around one third of what they lost on Tuesday as the war in Ukraine intensified.
A more vigorous rebound was prevented by surges in prices for oil, gas and agricultural commodities due to fears over the availability of Russian exports. That risks stoking an already-worring inflationary trend in global markets, not least in the U.S.
Federal Reserve Chair Jerome Powell repeated in prepared remarks to Congress that inflation is too high and is expected to remain above target for longer than first thought. As such, he repeated previous guidance that a first rate hike in four years is likely this month, to be followed by the start of sales from the Fed’s bond portfolio. Powell said it was too early to judge the medium-term impact on the U.S. economy from Russia’s invasion and the West’s response to it.
His colleague on the Fed’s policy-making committee, St. Louis Fed President James Bullard, was more forthright, saying that the effect on the U.S. economy will be smaller than that on Europe’s, and that the Fed still needs to tighten policy rapidly.
By 9:40 AM ET (1440 GMT), the was up 210 points, or 0.6%, at 33,505 points, while the was up 0.8% and the was up 0.4%.
Earlier, there was fresh evidence that the U.S. labor market is riding out the winter wave of Covid-19, with payrolls processor reporting that 475,000 people were hired by the private sector in the month through mid-February. That was 100,000 more than expected. More eye-catching was ADP (NASDAQ:)’s revision to the previous month’s figure, which swung from an initial assessment of -301,000 to +509,000. The scale of the revision is likely to further erode the credibility of an indicator that was once seen as an accurate real-time guide to employment trends.
Early movers to stand out included Ford Motor (NYSE:), after it announced that it will split its legacy automotive business from its new electric vehicle operations in an effort to unlock value. Ford also said it will boost EV spending by $20 billion over the next five years – to $50 billion from $20 billion – in an effort to recapture market share from earlier movers such as Tesla (NASDAQ:). Ford stock, which has lost a quarter of its value since early January, rose 6.7%.
Elsewhere, troubled department store chain Nordstrom (NYSE:) soared 34% after it said it expects to be able to return cash to shareholders in the current quarter. SoFi (NASDAQ:) stock rose 15% after the personal finance company said revenue grew 54% on the year in the fourth quarter, leading to a sharp reduction in its net loss.
Going in the other direction, Citigroup (NYSE:) stock fell 4.2%, hitting a new 52-week low as the market took the messages coming from the bank’s investor day negatively. The bank, perceived as having a larger direct exposure to Russia than its peers, issued underwhelming targets for returns on capital over the next three years as CEO Jane Fraser said restoring its competitiveness would be a “multiyear journey.”