U.S. Stocks Rise Ahead of Fed as Russia Shifts Ground; Oil Falls Further

By Geoffrey Smith and Liz Moyer

Investing.com -- U.S. stocks rose ahead of the opening in New York on Wednesday, with a sharp turnaround in Chinese markets providing an upbeat start to a day that will be dominated by the Federal Reserve.

By 9:50 AM ET, Dow Jones Industrial Average was up 385 points, or 1.1%, while the S&P 500 was up 1.5% and the NASDAQ Composite was up 2.2%. All three indexes made solid gains on Tuesday as crude oil prices tumbled, taking the sting out of one of the factors that have most hurt markets in the last two weeks. 

The Fed is expected to hike the target rate for fed funds by 25 basis points to a maximum of 0.5%, from 0.25% currently. Analysts expect at least five more such hikes in the course of the year in an effort to bring down inflation which is running at a 40-year high. 

Retail sales data for February rose 0.3%, slightly below expectations for 0.4% for the month. For the 12 months ended in February, retail sales rose 17.6%.

Chinese ADRs are in turbocharged mode after the central bank and government issued coordinated statements pledging support to both the economy generally and financial markets in particular. Chinese cash stock markets had their biggest ever one-day gain in response, after a tumultuous few sessions overshadowed by Covid-19 lockdowns and the threat of forced delisting from U.S. exchanges. 

The prospects for a ceasefire in Ukraine appeared to brighten on Wednesday as Russia's Foreign Minister Sergey Lavrov said that a neutrality model for Ukraine was on the table that would allow it to keep its own army - a big shift from Moscow's initial position of wanting to change the country's government and demilitarize it. 

Crude oil prices continued to slide, extending Tuesday's losses that were caused by fears for the strength of Chinese demand. China is currently enacting its most stringent lockdowns in two years to grapple with outbreaks of Covid in the manufacturing hub of Shenzhen and the northeastern province of Jilin. Public health measures have also forced Tesla (NASDAQ:TSLA) to shut its Shanghai factory for two days, according to the company.

U.S. crude futures fell 0.4% at $96.00 a barrel, further weighed down by a new forecast from the International Energy Agency, which said global demand in 2022 could fall by one million barrels a day on average due to the effects of the war and the Western sanctions accompanying it. 

Gold futures were down 0.7% at $1.915 an ounce.

This story was originally published at 7:07 AM ET and updated.

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