Maybe Ukraine isn’t all the stock market is concerned about. In this, the second week of the Russian invasion, the S&P 500 was up 1.86% Wednesday and this morning has advanced 0.22%.
While there’s no guarantee this positive mini-trend will continue, one powerful force seems to have overwhelmed the Ukraine nightmare, at least for the moment. That would be Federal Reserve Chair Jerome Powell’s soothing words about the central bank’s intention to move with care in its tightening campaign amid the turmoil in eastern Europe.
“The bottom line is we will proceed, but we will proceed carefully as we learn more about the implications of the Ukraine war,” Powell said Wednesday before the House Financial Services Committee.
He further calmed market fears by saying that, when the Fed’s policymaking panel meets in two weeks, it will hike short-term interest rates by just a quarter percentage point. Some have expected the Fed to start its tightening regimen with a half-point increase.
“One of the reasons why the stock market has held up so well is belief that the Fed will not be as aggressive in their new tightening policy as some were thinking they would be before the crisis in eastern Europe erupted,” Matt Maley, chief markets strategist at Miller Tabak, told Yahoo Finance.
He added: “So if we get some positive reinforcement on this subject, the stock market could hold up [or even bounce] for a while.”
Aside from the Ukraine situation, the market has been rattled of late by soaring inflation, oil hitting $110, and ongoing supply-chain snags, with the ever-present anxiety of yet-another possible new coronavirus variant.
Turns out that all five members of the FAANG cohort—Facebook (Meta), Apple, Amazon, Netflix, Google (Alphabet)—were up over the past five trading days, with Alphabet climbing 7%. They had been sliding before, amid the prospect of higher interest rates, which are anathema to tech shares.