Two events have moved stocks up today. First, Federal Reserve Chair Jerome Powell said he is inclined to just go with just a 25-basis-point hike at the March meeting. Second, Reuters reports that Russian Foreign Minister Sergey Lavrov said Moscow was ready to discuss Ukrainian President Volodymyr Zelenskyy's desire to receive security guarantees. The big concern of traders was that Powell would overshoot the mark on rate hikes, causing a growth slowdown that would force analysts to reduce earnings estimates for 2022. Powell not only said he would support a 25-basis-point rate hike — removing the threat of a more aggressive 50-basis-point rate hike — but also said the Fed would move "carefully" on future rate hikes. These two statements have greatly reduced the fear that Powell will make a "policy mistake" and kill the growth outlook. "It reduces the risk the Fed will tighten and create a recession," Fundstrat's Tom Lee said on "Halftime Report." Stocks immediately responded. Yields rose, and regional banks like U.S. Bancorp were up by more than 4%. Large international Industrials like Caterpillar and Dover were also up over 5% and more than 4%, respectively. Many reopening plays were also higher, with casinos such as Las Vegas Sands , hotels such as Hyatt and Marriott , and airlines such as United rising sharply. Railroads, including CSX and Union Pacific , also rallied. Despite the late morning rally, the biggest volume trades in the ETF space remained in commodities as traders use these vehicles to speculate on the Ukraine crisis. Volumes have been heavy this week in commodity ETFs like the VanEck Natural Resources ETF (HAP), VanEck Agribusiness (MOO), United States Oil Fund (USO), as well as Treasury ETFs PIMCO Active Bond (BOND) and iShares 3-7 Year Treasury Bond ETF (IEI).
Federal Reserve Chairman Jerome Powell speaks during his re-nomination hearing before the Senate Banking, Housing and Urban Affairs Committee on Jan. 11, 2022 in Washington.
Brendan Smialowski-Pool/Getty Images
Two events have moved stocks up today.