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NEW YORK: The S&P 500 and the Nasdaq indexes jumped over 1% on Tuesday, led by gains in shares of megacap growth names and banks on signs of a de-escalation in tensions between Russia and Ukraine, while investors shrugged off hotter-than expected inflation data.

Russia said some of its military units were returning to their bases after exercises near Ukraine and that Moscow was prepared to continue dialogue on missiles and other security issues with the West.

Megacap growth stocks including Apple Inc, Google-owner Alphabet Inc, Amazon.com Inc, Microsoft Corp, Meta Platforms Inc and Tesla Inc rose between 1.5% and 4.3%.

Banks added 0.9%, while the smallcap Russell 2000 index gained 1.8%.

Data on Tuesday showed US producer prices increased more than expected in January as supply chains remained snarled, another sign that high inflation could persist through much of this year.

Markets are pricing a 61.8% chance of a 50 basis point hike and a 38.2% chance of a 0.25% hike at the central bank’s March meeting. Minutes from the Fed’s January policy meeting are due on Wednesday.

“Speculation around the Fed’s action plan, which goes hand-in-hand with inflation, has no doubt been driving market volatility, but so have geopolitics,” said Mike Loewengart, managing director of investment strategy for E*Trade Financial.

“And with tension between Russia and Ukraine seemingly cooling, at least for now, the market could welcome some certainty.”

The CBOE Market Volatility index, a gauge for investor anxiety, fell back after shooting up to its highest level in nearly three weeks in the previous session.

At 10:00 a.m. ET, the Dow Jones Industrial Average was up 308.63 points, or 0.89%, at 34,874.80, the S&P 500 was up 50.16 points, or 1.14%, at 4,451.83, and the Nasdaq Composite was up 248.13 points, or 1.80%, at 14,039.05.

The major indexes have had a rocky start to 2022, with the tech-heavy Nasdaq down 10.5% so far this year as geopolitical tensions rattled investors’ sentiment already hit by worries over aggressive interest rate hikes by the Fed to combat surging inflation.

Ten of the 11 major S&P sectors advanced in early trading, with nine of them up more than 1% each.

Energy shares slipped as oil prices dropped from a seven-year high, while the Philadelphia SE Semiconductor index climbed 2.7%.

Arista Networks jumped 4.1% after the cloud infrastructure supplier forecast current-quarter revenue above estimates.

Battered travel stocks including those of carriers and cruise operators also rallied.

Marriott International Inc added 4.2% after its fourth-quarter results topped analysts’ expectations, as increasing vaccination rates and holiday-season traffic boosted occupancy rates across its hotels.

Advancing issues outnumbered decliners by a 3.21-to-1 ratio on the NYSE and by a 6.73-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and three new lows, while the Nasdaq recorded 23 new highs and 27 new lows.

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