U.S. stock futures jumped on Tuesday morning after Russia appeared to be backing away from an immediate invasion of Ukraine, cooling geopolitical tensions that have knocked the stock market down the last three days.
The Russian Defense Ministry said it had begun returning some troops to deployment bases after training exercises near the Ukrainian border.
Futures tied to the Dow Jones Industrial Average jumped 320 points, or 1%. S&P 500 futures climbed 1.2% and Nasdaq 100 futures advanced 1.7%. All three major benchmarks were down in the three prior sessions. The S&P 500 is about 8% from its record high.
Russian Defense Ministry spokesman Igor Konashenkov said troops who had recently been posted to Russia’s southern and western military districts — which share a border with Ukraine — had completed their drills and “have already begun loading onto rail and road transport and will begin moving to their military garrisons today.”
WTI crude prices fell 3%, while the 10-year Treasury yield jumped to 2.04% as tensions eased. The VanEck Russia ETF, a U.S.-traded fund which invests in big Russian stocks, jumped nearly 5% in premarket trading.
Airline and cruise stocks led early premarket gainers while energy companies were the biggest losers as oil prices fell. American Airlines rose 4% in premarket trading and Carnival Corp. added more than 4%.
In addition to the Ukraine drama, investors got another look at the inflation picture on Tuesday.
The producer price index, which measures final-demand goods and services, increased 1% for the month, against the Dow Jones estimate for 0.5%. Over the past 12 months the gauge rose an unadjusted 9.7%. Excluding food, energy and trade services, co-called core PPI increased 0.9% for the month, topping the 0.4% estimate.
Wall Street is coming off a volatile Monday trading session.
The Dow closed lower by 171.89 points, or 0.5%, after falling more than 400 points at one point. The S&P 500 dropped as much as 1.2% before ending the day 0.4% lower. The Nasdaq Composite fell 0.9% at one point before closing just below the flatline.
Those moves came as the Russia-Ukraine conflict had appeared to escalate. Secretary of State Antony Blinken ordered the closing of the U.S. embassy in Kyiv, Ukraine, citing a “dramatic acceleration in the buildup of Russian forces” on Ukraine’s border.
Concerns over multiple Fed rate hikes also kept investors on edge.
St. Louis Fed President James Bullard told CNBC’s Steve Liesman on Monday that the central bank needs to be aggressive in fighting inflation. The consumer price index rose last month at its fastest year-over-year pace since 1982, leading Citigroup and Goldman Sachs to increase their rate hike outlook for 2022 to seven.
“I do think we need to front-load more of our planned removal of accommodation than we would have previously. We’ve been surprised to the upside on inflation. This is a lot of inflation,” Bullard said.
“Our credibility is on the line here and we do have to react to the data,” he added. “However, I do think we can do it in a way that’s organized and not disruptive to markets.”
–CNBC’s Elliot Smith contributed to this report.
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