Dow rebounds nearly 600 points despite surge in oil prices, Treasury yields

Stocks rebounded sharply on Wednesday despite a continued surge in oil prices amid the intensifying conflict between Russia and Ukraine.

The Dow Jones Industrial Average gained 596.40 points, or 1.79%, to close at 33,891.35. The S&P 500 added 1.86% to 4,386.54, while the tech-heavy Nasdaq Composite rose 1.62% to 13,752.02. The gains effectively reversed losses from Tuesday’s session.

It was a broad rally, with nearly every name in the 30-stock Dow moving higher. Shares of Caterpillar rose more than 5%, while Intel rose 4.4% and Goldman Sachs climbed 2.5%.

“I think there is some relief that U.S. economic data continues to remain solid. … It’s a tug-of-war between ongoing uncertainty but still solid domestic fundamentals,” said Angelo Kourkafas, an investment strategist at Edward Jones.

“With the market down about 10%, roughly, in correction territory, and valuations having normalized, there is some support. But the situation remains very fluid, which means that back and forth is likely to continue,” Kourkafas added.

The moves came even as oil prices trekked upward, building on a massive move in the previous session. Futures for West Texas Intermediate traded as high as $112.51 per barrel on Wednesday morning before trimming gains to about $111. Shares of Chevron rose nearly 3%.

Stocks moved higher as Fed Chair Jerome Powell testified before Congress for his semiannual monetary policy update. The central bank chief said that rate hikes are likely to begin this month despite the “highly uncertain” impact of the war in Ukraine, and that the Fed would make progress on but not finalize a plan to reduce its balance sheet.

“The bottom line is we will proceed, but we will proceed carefully, as we learn more about the implications of the Ukraine war on the economy,” Powell said.

Government bond yields also rebounded Wednesday in an unusually large move. The benchmark 10-year note rose to about 1.9% after falling below 1.7% the day before. It was the biggest one-day move for the 10-year since 2020.

The reversal appeared to help bank stocks, with Wells Fargo rising than 3.8%.

“Today’s testimony is kind of a sanity check. 25 basis points is an incremental positive, and from a markets perspective it is providing visibility,” Fundstrat’s Tom Lee said on “Halftime Report.” “I think what we’re seeing today is really markets were positioned for a much more hawkish Fed and a much more dire outlook.”

The volatility in markets has been caused in part by Russia’s invasion of Ukraine. Reports on Wednesday indicated that Russian forces penetrated Kherson and have surrounded Mariupol, two key cities in the southern part of the country. The U.S. announced on Tuesday that it was banning Russian planes from American airspace.

Investors looking toward a key employment report on Friday got a bullish preview in Wednesday’s ADP private payrolls report. Private companies in the U.S. added 475,000 jobs in February, ADP said. The firm also revised its January numbers upward. Economists polled by Dow Jones were expecting 400,000.

Corporate news helped push the market higher. Shares of Ford popped 8.4% after the automaker announced it would split its electric vehicle and legacy production businesses into two separate units. Nordstrom spiked by more than 37% following a strong earnings report.