Stocks finished sharply higher Tuesday while the dollar extended gains and Treasury bond yields bumped to multi-year peaks, as investors reacted to hawkish comments from an influential Federal Reserve president, a resurgence in fighting in eastern Ukraine and the start of a wave of corporate earnings reports on Wall Street.
The Dow Jones Industrial Average finished up 499 points, or 1.45%, to 34,911, while the S&P 500 gained 1.61% and the tech-heavy Nasdaq gained 2.15%.
U.S. Airline shares edged higher after most major carriers dropped their in-flight mask mandates late Monday following a ruling from a Federal judge in Florida.
"The masks are off on US flights/airports and Uber thanks to a Florida federal judge ruling that the CDC had no authority to mandate a national mask policy," Louis Navellier, founder of money manager Navellier & Associate. "Re-opening demand sentiment is energized. Airlines and travel stocks rally. Stock indexes are green across the board."
Navellier added that "a recession is nowhere in sight, mid-single-digit inflation and interest rates are not enough baggage to derail a post-pandemic reopening economy."
Federal Reserve Bank of St. Louis President James Bullard told an event in Washington Monday that he wouldn't "rule out" a 75 basis point rate hike in any of the central bank's upcoming meetings, adding that he'd like to see faster moves from his colleagues in order to tamp-down the inflationary pressures building in the world's biggest economy.
While not his "base case", Bullard's comments nonetheless lifted bets on the Fed's policy path, with the CME Group's FedWatch tool now pricing in a 91% chance of a 50 basis point increase next month, with a 62% chance of a similarly-sized moved in June.
Russia's sudden re-grouping of troops and tanks in the Donbas region of eastern Ukraine has also unsettled markets, as reports suggest a renewed push into the front established by Ukrainian soldiers early last month that would make a worrying escalation of the nearly two-month long conflict.
Benchmark 10-year Treasury note yields nudged higher, to just over 2.942%, while 30-year yields passed the 3% mark for the first time in three years. The dollar index was last seen 0.19% higher against a basket of six major global currencies at 100.97.
Twitter (TWTR) shares fell 4.7% as investors looked to reports of potential takeover interest in the social media group from private equity firms as billionaire Elon Musk continues his attack on the board.
Multiple media reports suggest that Apollo Global Management has expressed willingness to use its credit investment platform to support any move to buy the micro-blogging website, including Musk's unsolicited $43 billion take-private proposal.
Several stocks were also on the move amid a parade of first quarter earnings reports, with Johnson & Johnson (JNJ) rising 3.2% after it posted stronger-than-expected first quarter earnings but lowered its full-year profit forecast, and suspended its guidance for vaccine sales amid what it called a global surplus and waning demand.
Hasbro (HAS) gained 5.2% as it posted weaker-than-expected first quarter earnings but noted that higher toy prices and solid demand will deliver better profits by the end of the year as it looks to see-off pressure from activists investors.
Lockheed Martin (LMT) lost 1.5% after stronger-than-expected second quarter earnings Tuesday as investors reacted to light revenues as supply chain snarls clipped overall sales in all four of its business divisions apart from aeronautics.
Meanwhile, U.S. District Judge Kathryn Kimball Mizelle said the 14-month old mandate, established by the Centers for Disease Control as well as the U.S. Department of Transportation, was unlawful in a case filed by a non-profit interest group called Health Freedom Defense Fund.
United Airlines (UAL) rose 4.5% to $45.95, while Delta (DAL) rose 2.3% to $47.32 and Southwest (LUV) gained 2.3% to $47.32.
Netflix (NFLX) shares finished up 3.2% ahead of the online streaming group's first quarter earnings report after the close of trading, but tumbled in after-hours trading after the company said it lost subscribers for the first time in more than 10 years.
Collective S&P 500 profits are expected to rise 6.3% from last year to $408.3 billion over the first quarter, according to Refinitiv data, before improving only modestly to a growth rate of 6.4% over the three months ending in June.
