Risk on! Stocks Surge as Oil Prices Slide 11%.

“Equity markets have a bid today as the markets are clinging to the slightest glimmer of hope of a possible step towards de-escalation,” wrote Anu Gaggar, global investment strategist for Commonwealth Financial Network. “Markets may also be taking a break from a downtrend and seeing some consolidation due to oversold conditions.” 

WTI crude oil tumbled to just over $109 a barrel; the price touched $130 late Sunday. The move lower sent the

Energy Select Sector SPDR
Fund (XLE) down 3.1% after it had gained more than 30% for the year.

Money was flowing out of safe assets and largely into riskier ones. Not only were stocks higher, but the price of the 10-year Treasury note dropped, with the yield rising to 1.94% from a Tuesday closing level of 1.85%. The price of gold fell 2.4%. 

Stock markets were also rallying in Europe, where Frankfurt’s

DAX
surged 7.9%. Markets in Asia were more downbeat: Tokyo’s

Nikkei 225,
for example, slipped 0.3%.

Markets are happy to see the price of oil pause its run-up, up 45% gain for the year. Markets are concerned that restrictions on Russian oil, which the U.S. has already announced, will severely reduce the amount of oil available on the global market. The higher oil price only adds to the already burdensome inflation consumers have to deal with. 

Inflation is on the radar of the Federal Reserve, which announces its interest rate decision next week. Markets expect the Fed to lift rates by a quarter of a percentage point and will be listening for cues as to how many rate hikes are coming.

Investors are closely watching the Russia-Ukraine war, and are reacting to it. Russia and Ukraine agreed to a temporary cease-fire Tuesday, and there are other signs of the possibility of a deal between the countries. Bloomberg reported that Ukraine is open to Russia’s request for neutrality, but only under certain conditions. 

Talks are set for Thursday in Turkey: Russian Foreign Minister Sergei Lavrov scheduled to meet with Ukrainian counterpart Dmytro Kuleba. 

Stocks that have been dealt the heaviest blow on the Russia-Ukraine conflict are bouncing back the most. The

U.S. Global Jets
Exchange-Traded Fund (JETS), which tracks airline stocks, is down 18% since Feb. 10, the day before markets began to reflect the Russia-related risk, worse than the S&P 500’s 5% swoon. That’s because fuel, the price of which has risen, is a major expense item for airlines. The airline ETF rose 5.5% Wednesday. The 

Consumer Discretionary Select Sector SPDR
Fund (XLY), down 9% since Feb. 10, gained 3.2% Wednesday. 

“All the areas of the market that have been hit the hardest recently are snapping back sharply,” wrote Michael Reinking, senior market strategist at New York Stock Exchange. 

Still, the major indexes around the globe well below their all-time highs and there are key levels that they need pass before anybody expects any sustained gains in stocks. That key level for the S&P 500—currently at 4,277 —is 4,440, wrote John Kolovos, chief technical strategist at Macro Risk Advisors.

“Above there, then the positive signals from our indicator work will begin to be confirmed,” Kolovos said.

Waves of selling had knocked the index down from roughly 4,400 earlier this month. If buyers come in at that level, it indicates that the market is turning more optimistic. Such optimism depends on evidence of a Russia-Ukraine de-escalation and more global supply of oil.

Louis Navellier, founder of Navellier & Associates warned, “There is no reason yet to expect a ceasefire in the Ukraine conflict.” 

The uncertainty that Navellier pointed out has made the market swing wildly this year. The S&P 500’s daily movement—up or down—has averaged 1.37% in the past 21 trading days, the highest average since May 2020. 

Bitcoin and other cryptocurrencies staged a rally, fueled by expectations for an executive order from Biden that could be supportive of the development of digital assets.

Bitcoin,
the leading cryptocurrency, rose 8%. Smaller peer

Ether
was similarly buoyant, climbing 4.3%.

Five stocks on the move Wednesday:

Stitch Fix (ticker: SFIX) dropped 6.1% after the online retailer cut its full-year financial forecast, noting that revenue may decline.

Bumble (BMBL) stock gained 42% after the company reported a loss of 8 cents a share, wider than estimates of a loss of 2 cents a share, on revenue of $208.2 million, below expectations for $209.6 million. The stock was upgraded to Outperform at BMO Capital.

General Electric (GE) stock rose 3.5% after the company announced a $3 billion share repurchase program. 

Dollar Tree (DLTR) stock rose 0.7% after getting upgraded to Overweight from Neutral at Piper Sandler and upgraded to Buy from Hold at Loop Capital. 

PayPal (PYPL) stock advanced 5.6% even after getting downgraded to Neutral from Buy at Bank of America. 

Write to Jack Denton at jack.denton@dowjones.com and Jacob Sonenshine at jacob.sonenshine@barrons.com