Gains in financial and healthcare shares bolstered the three main U.S. stock indexes on Monday, with investors focusing on developments around the Russia-Ukraine crisis and the upcoming Federal Reserve policy meeting.
The conflict has hammered global financial markets and fueled concerns about runaway inflation as oil prices skyrocketed in the wake of tough Western sanctions against Russia, a top commodity exporter.
Talks between Ukraine and Russia paused on Monday and will continue on Tuesday, one of Ukraine’s negotiators said on Twitter.
Kyiv had begun “hard” talks on a ceasefire, immediate withdrawal of troops and security guarantees with Moscow, despite the fatal shelling of a residential building in Kyiv.
“What we should be focused on is that talks are going to continue between Russia and Ukraine. That’s a positive,” said Thomas Hayes, chairman and managing member at Great Hill Capital in New York.
Seven of the 11 major S&P sectors advanced in early trading, with financial up 1.9%, followed by gains in defensive healthcare shares.
Bank of America rose 3.3%, leading gains among big Wall Street banks, while the broader banks index added 2.2%.
“They are telling that it’s being priced in that the Fed is beginning its rate increases and that banks will benefit from that,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
Investors widely expect the Fed to announce the first rate increase since 2018 at its March 15-16 meeting to curb surging inflation. Traders see a 91% chance of a 25-basis-point hike later this week.
Data last week showed U.S. consumer prices grew at their fastest pace in 40 years last month, following a sharp rally in crude prices due to the Ukraine crisis.
Nasdaq underperformed its peers as shares of Apple Inc slipped 1.1% after its supplier Hon Hai Precision Industry Co Ltd, known as Foxconn, suspended operations in China’s Shenzhen amid rising COVID-19 cases.
U.S.-listed Chinese tech stocks including Alibaba Group slumped 8.5%, tracking sharp falls in the domestic market, on concerns about tighter regulation and a potential hit to the country’s economy.
Energy shares slipped, with Occidental Petroleum down 6.4%, as Brent crude fell below $110 a barrel, just a week after it scaled as much as $139 due to the Ukraine crisis.
At 10:08 a.m. ET, the Dow Jones Industrial Average was up 245.84 points, or 0.75%, at 33,190.03, the S&P 500 was up 20.53 points, or 0.49%, at 4,224.84, and the Nasdaq Composite was up 20.02 points, or 0.16%, at 12,863.83.
The CBOE volatility index, also known as Wall Street’s fear gauge, rose to its highest level since March 9.
Declining issues outnumbered advancers for a 1.21-to-1 ratio on the NYSE and for a 1.24-to-1 ratio on the Nasdaq.
The S&P index recorded eight new 52-week highs and 17 new lows, while the Nasdaq recorded 15 new highs and 276 new lows.
