By Geoffrey Smith
Investing.com -- U.S. stock markets opened higher on Tuesday on relief at signs of progress in peace talks between Russia and Ukraine, even though hostilities continue to rage on the ground.
Russia's chief negotiator said his country had agreed to de-escalate the attacks on the capital Kyiv and the northern city of Chernihiv in an effort to "build trust." Earlier, Mikhaylo Podolyak, an aide to Ukrainian President Volodymyr Zelensky, had briefed that discussions on a ceasefire had taken place that were based on a future of armed neutrality for Ukraine, guaranteed by various countries including the U.S. and Russia, while Russia's Defense Minister Sergei Shoigu claimed that Russia had effectively achieved its aims in securing the 'liberation' of the eastern region of Donbas.
It wasn't immediately clear whether the progress made would be acceptable to the top leadership of either country, given that Ukraine still refuses to acknowledge Russia's annexation of Crimea and given Vladimir Putin's previous comments on the need to restore a Russian sphere of influence in eastern Europe. However, Russia appears to have dropped its implicit demand for regime change in Ukraine, something it styled as 'de-Nazification' even though Ukraine's President is both Jewish and democratically elected.
The news more than made up for worrying signs of inflation from the housing market, where annual house prices rose by 18.2% in the year through January, according to data released earlier. There were also fresh signs of tightness in the labor market, with the number of job openings rising again last month
By 9:45 AM ET (1345 GMT), the Dow Jones Industrial Average was up 359 points, or 1.0%, at 35,315 points, while the S&P was up 0.9% to stand less than 4% off its all-time high. The Nasdaq Composite was up 1.3%.
Markets were mainly affected, as so often in recent weeks, through the oil channel. Peace would reduce the likelihood of extreme western action to remove Russian energy exports from world markets, the threat of which has driven oil, gas, and coal up just as inflation is running at a four-decade high in much of the world. Lower oil prices would change the outlook for inflation, allowing the Federal Reserve to be less aggressive in tightening monetary policy. As such, bond yields fell along the yield curve, bringing down the cost of capital for companies and improving the outlook for equity returns.
Among early movers, FedEx (NYSE:FDX) stock rose 4.2%, helped not only by the prospect of lower fuel costs but also by the news Chief Operating Officer Raj Subramaniam will take over as CEO from June 1, replacing long-time leader Fred Smith. Nielsen (NYSE:NLSN) stock rose 21% after the market research company agreed to be bought by a Brookfield-led private equity consortium for around $16 billion including debt.
Elsewhere, Dave & Buster’s (NASDAQ:PLAY) stock rose 4.0% after the restaurant and entertainment chain said comparable sales were up 5.4% from pre-COVID times in the first eight weeks of the year - an update that more than made up for a quarterly report that missed expectations on both top and bottom lines due to various pandemic-related issues.