US investors more optimistic again – Wall Street closes clearly in the black

new York The downward trend on Wall Street has stopped for the time being. The leading index Dow Jones closed 1.2 percent up at 34,989 points. The broader S&P 500 gained 1.6 percent to 4,471 points. The technology exchange Nasdaq was even able to make up 2.5 percent.
Investors reacted with relief to the latest signals from Russia on Tuesday. President Vladimir Putin had announced that he wanted to withdraw the first troops in the Ukraine conflict. That lifted the mood in New York significantly. “We are in a period of relief after the recent headlines on the Russia-Ukraine crisis,” said investment bank Mizhuo’s investment strategist Peter McCallum. Especially the technology stocks got a boost after several weak days. Apple gained 2.3 percent. Nvidia went out of business with a plus of nine percent.

Bitcoin rises, oil prices fall

Other risky assets such as cryptocurrencies were back in high demand. Bitcoin advanced four percent to $43,935 and Ethereum advanced six percent to $3093. Investors therefore also boldly grabbed stocks from the cryptocurrency sector and companies that deal with the blockchain technology on which Bitcoin & Co is based. The shares of Coinbase, Riot, Marathon, Overstock and Silvergate rose by up to twelve percent. The stocks of the electric car manufacturer Tesla and the software company MicroStrategy, which have invested billions in Bitcoin, advanced by almost seven percent.

Meanwhile, oil prices eased after rising to a new seven-year high on Monday. Gold, the Japanese yen and the Swiss franc, which are considered safe havens in times of crisis, also traded weaker.
There was also positive news with regard to the Covid numbers in the USA. The number of new infections is 80 percent below the all-time high from January. “This is another sign that the opening up of the economy is progressing,” said Ryan Detrick of LPL Financial on the US stock exchange broadcaster CNBC.

However, experts warn against too much optimism. For one thing, the Russian crisis is far from over. US President Joe Biden made a clear statement in front of the cameras shortly before the stock market closed on Tuesday. A Russian invasion of Ukraine remains “a concrete possibility,” emphasized the democrat.

The Russian military is still “positioned in a very threatening position”. The United States would also need further evidence that Russia had actually begun to withdraw troops. European government officials had previously made similar statements. Biden again underlined that the Nord Stream 2 gas pipeline would fail if Russia invaded Ukraine. The crisis in Ukraine could also lead to higher gasoline prices in the USA. However, Biden promised to do “whatever it takes to keep gas prices down.”

“In January, Russia exported almost 4.7 million barrels of crude oil per day,” calculated Commerzbank analyst Carsten Fritsch. “Should part of it be lost in the event of a military conflict and due to Western sanctions, this could not be easily offset.” In the wake of the falling oil price, shares in companies such as Exxon and Chevron fell by up to 1.2 percent.

Inflation concerns were not the focus of investors on Tuesday. Nonetheless, there were other economic data showing that prices in the US continued to rise significantly. Producer prices increased significantly again. In January, prices at the manufacturer level rose by 9.7 percent compared to the same month last year, as the Department of Labor announced on Tuesday in Washington – more than expected.

That only strengthens the Federal Reserve’s (Fed) case for raising interest rates at its next meeting in March, said Mike Loewengart, who oversees investment strategies at Morgan Stanley subsidiary E-Trade. “Higher inflation is probably already priced in.” Consumer prices also rose significantly in January, prompting a number of central bankers to discuss a more rapid turnaround in monetary policy over the past few days.

This in turn increases the likelihood that the central bankers will make mistakes in their monetary policy turnaround and possibly send the country into a recession, as economist Mohamed El-Erian warns, who also advises Allianz, among other things.
Goldman Sachs raised its interest rate forecast on Monday. The bank now expects seven interest rate increases this year instead of the previous five.

Look at the individual values:

intel: The chip manufacturer swallows the Israeli contract manufacturer Tower Semiconductor for 5.4 billion dollars. Its US-listed shares rose more than 40 percent at times to a 17-year high of $47.47. The company is a bargain with a purchase price of 53 dollars per share, praised analyst Gus Richards from the investment bank Northland. In addition, Intel secures expertise in certain chips that are in particularly high demand. Intel shares are up 1.8 percent and the Philadelphia semiconductor index is up 5.5 percent.

Marriott: Thanks to a surprisingly strong quarterly result, investors also boldly grabbed Marriott stocks. The strong figures underpin his forecast that the hotel chain will start paying out money to its shareholders again from the second half of 2022, wrote analyst David Katz from the investment bank Jefferies. Marriott shares rose as much as 5.8 percent to a record high of $181.34. In their slipstream, shares in rival Hilton, airline Delta and online travel agency Expedia gained up to 7.5 percent.

Arista Networks: The company reported quarterly earnings of 82 cents a share, nine cents a share above estimates. The company’s network software and services revenue also beat Wall Street forecasts. Arista also issued a positive forecast, which helped the company’s shares surge 5.67 percent.

Notification budget: The company reported better-than-expected earnings and sales for its most recent quarter. Higher leasing activity offset higher expenses. But the stock slipped more than 12 percent.

Moneygram: A $1.8 billion bid by financial investor Madison Dearborn gave the share one of the biggest jumps in the company’s history. The money sender’s shares rose 19.55 percent on Wall Street to $10.70. Madison offers eleven dollars a share and wants to take the company private.

More: If Russia gets serious: how will the stock market react?