By Yasin Ebrahim

Investing.com – The S&P 500 rallied Friday, clawing its way out from correction territory as investors weighed signs that Russia could be open to returning to the diplomatic table even as the Kremlin’s forces are closing in on Ukrainian capital Kyiv.   

With the correction zone at 10%, it fell to 2.2%. Since its peak in May 2009, losses have fallen to 9%. An additional 2.2% or 834 points was added to the 1.6% gain.

As the Russian invasion of Ukraine entered its second day, reports that Russian President Vladimir Putin is open to sending a delegation to Belarusian capital Minsk to negotiate with Ukraine underpinned bullish bets on risk assets. However, there is uncertainty about how serious Putin really is regarding a diplomatic solution as Russia’s forces appear to be closing in on Kyiv. 

Europe and the U.S. continued to increase their sanctions against Russia. U.S., EU and EU have announced sanctions against Russia President Vladimir Putin as well as Foreign Minister Sergei Lavrov.

Still, the sanctions are viewed by some as not going far enough to force Putin to rethink his plan, which he said seeks to bring about the “denazification” and “demilitarization” of Ukraine. 

U.S. President Joe Biden outlined fresh sanctions on Thursday aimed at further crippling Russia’s economy and curbing its access to key technology used to advance its military and industrial capabilities. 

There had been some pressure on the president to roll out even tougher measures including cutting Russia off from the global payments system, and implementing measures to hamper Russia’s oil and gas industry, which accounts for the bulk of the latter’s growth.

Although the markets have bottomed, the weaker than expected sanctions played an important role in the resuming of bullish stock market bets. 

“It’s hard to declare with too much certainty that the market has hit a bottom, but I do think the weaker sanctions supported the market reversal yesterday,” Mark Heppenstall, chief investment officer at Penn Mutual Asset Management, said in interview on Friday.

The market was led by materials as investors placed bets on commodities prices trending higher due to the Russia-Ukraine conflict which could affect key global commodity supplies, including wheat and energy.

Nucor (NYSE:), Freeport-McMoran Copper & Gold (NYSE:), Mosaic (NYSE:) were among the biggest gainers in the sector.

Rising bank stocks helped boost financials, while Treasury yields drove them higher as ongoing red-hot inflation signs keep the Federal Reserve on track to raise rates in March.

Signature Bank (NASDAQ)), Truist Financial, (NYSE:), Zions Bancorporation were all up by more than 66%

“What’s happening in Ukraine does give the Fed a little more cover to be patient on monetary policy tightening, but a 25 basis point hike in March and a 25 basis point hike in June, are the base case scenarios,” Heppenstall said. “I see the Fed funds rate at 1% to 1.25% by year end… I would say four to five rate hikes sounds reasonable to me.” 

A majority of the quarterly positive results supported sentiment in relation to the larger market.

Block (NYSE: ) posted fourth quarter results that were better than expected and provided more guidance than anticipated, pushing its shares up 26%.

Beyond Meat (NASDAQ:) fell more than 9% after reporting a wider-than-expected loss as revenue came in below Wall Street estimates as management  “ramped up investment spending in an environment of slowing growth at retail, leading to significant losses,” Oppenheimer said in a note. 

“We expect a meaningful reset of Street numbers and view a path to profitability [for Beyond Meat] even more challenging going forward.”

Etsy’s (NASDAQ:) reports better than expected fourth-quarter earnings, revenue and profits, driving its shares higher by more than 16%.