Easing Concerns About Ukraine Lead To Rally On Wall Street - U.S. Commentary

(RTTNews) - After ending the previous session notably lower, stocks showed a substantial move back to the upside during trading on Tuesday. The rebound by the markets reflected easing concerns about the situation in Ukraine.

The major averages ended the day sharply higher, more than offsetting yesterday's losses. The Dow jumped 227.85 points or 1.4 percent to 16,395.88, the Nasdaq soared 74.67 points or 1.8 percent to 4,351.97 and the S&P 500 shot up 28.18 points or 1.5 percent to 1,873.91.

The rally on Wall Street came as comments from Russian President Vladimir Putin eased concerns about the possibility of an escalation of the conflict in Ukraine.

In remarks to reporters, Putin said there was "no need" for Russia to use military force in Ukraine, although he reserved the right to take action to protect ethnic Russians.

Putin claimed that Viktor Yanukovych remains Ukraine's "legitimate president" but said that military force would only be used in "an extreme case."

The Russian president also noted that military exercises near the Ukrainian border had ended as scheduled and claimed that the exercises were pre-planned and had nothing to do with the events in Ukraine.

Meanwhile, U.S. President Barack Obama remained critical of Russia's intervention in Crimea, describing it as a violation of Ukraine's territorial integrity and sovereignty.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Repeating what I said yesterday that most geopolitical events are usually fleeting in its market impact, mattering just one day is pretty impressive."

"Russia though now has to deal with the aftermath of its actions and will likely see a drop in FDI, a further taint in its reputation and Putin still knows he holds many cards in the geopolitical world with his energy business in particular," he added.

The comments from the Russian President contributed to a rally by the global markets and inspired U.S. traders to pick up stocks at reduced levels following yesterday's weakness.

Among individual stocks, shares of Vipshop (VIPS) surged up by 32.4 percent after the Chinese online discount retailer reported better than expected fourth quarter results and provided upbeat guidance for the current quarter.

Media company E.W. Scripps (SSP) also turned in a strong performance after reporting fourth quarter operating revenues that exceeded estimates and forecasting core business growth in 2014.

On the other hand, shares of RadioShack (RSH) came under pressure after the electronics retailer reported a wider than expected fourth quarter loss. The company also announced plans to close up to 1,100 underperforming stores in the U.S.

Sector News

Most of the major sectors showed strong moves to the upside on the day, reflecting the broad based buying interest on Wall Street.

Tobacco stocks turned in some of the market's best performances, driving the NYSE Arca Tobacco Index up by 3.5 percent to a three-month closing high. The strength in the sector was partly due to reports on merger talks between Reynolds American (RAI) and Lorillard (LO).

Significant strength was also visible among brokerage stocks, as reflected by the 3.4 percent gain posted by the NYSE Arca Broker/Dealer Index. The index more than offset the loss posted on Monday, reaching its best closing level in well over a month.

Telecom, airline, software, and computer hardware stock also showed notable moves back to the upside after coming under pressure on Monday.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index rose by 0.5 percent, while Hong Kong's Hang Seng Index advanced by 0.7 percent.

The major European markets moved substantially higher on the day. While the U.K.'s FTSE 100 Index jumped by 1.7 percent, the German DAX Index and the French CAC 40 Index both surged up by 2.5 percent.

In the bond market, treasuries showed a notable move to the downside after trending higher in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 8.4 basis points to 2.691 percent.

Looking Ahead

While any further developments regarding Ukraine could impact trading on Wednesday, investors are likely to keep a close eye on U.S. reports on private sector employment and service sector activity.

The Federal Reserve is also due to release its Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Fed districts.