S&P 500 rallies for a second day on hopes for Russia-Ukraine ceasefire, Dow jumps 350 points

The S&P 500 rallied for a second day, hitting the highs of the session on a report that Ukraine and Russia are making strides toward a peace agreement.

The two countries have made "significant progress" on a peace plan and Russian withdrawal, the Financial Times reported, citing three people.

The broad market index rose 1.7%, while the Dow Jones Industrial Average climbed 374 points, or 1.1%. The Nasdaq Composite jumped 2.7%.

Before the FT report, stocks were gaining on hopes that some sort of ceasefire was close. Ukrainian President Volodymyr Zelenskyy said a peace agreement was beginning to "sound more realistic" in an address to the nation Tuesday. Russian Foreign Minister Sergey Lavrov told the BBC there was "some hope of reaching a compromise." Russian State media quoting the Kremlin echoed similar sentiments overnight.

"You're starting to see some resolution of some of the overhang in terms of the broader economic issues," said Stephanie Lang, chief investment officer at Homrich Berg. "The market is hoping for resolution in the Ukraine, but of course, it's just talks at this point, and we actually need to see a ceasefire, we need to see that play out in more entirety before we close the loop on that so there's still a lot of uncertainty."

The war between Ukraine and Russia has sent ripples through global financial markets, pushing commodity prices sharply higher and stocks lower. However, some commodities have cooled off in recent days, while the U.S. equity market tries to find its footing.

U.S. oil traded lower on Wednesday following the FT report, after topping a multiyear high of $130 earlier this month.

Micron Technology was among the best-performing S&P 500 stocks, gaining more than 4%. Starbucks shares also climbed 6% after an upgrade from JPMorgan, while Dow member Boeing advanced more than 2.7%.

Several Chinese stocks rocketed more than 20% higher after China signaled its support for overseas listings, after days of worries around delisting led them to tumble. Pinduoduo surged 34% and DiDi Global jumped 38%. The China Internet ETF is on pace for best day ever, up more than 25%, after its worst day ever on Monday.

Stocks were rallying in part on signs that a ceasefire could be possible in the Russia-Ukraine war.

Stocks, meanwhile, are coming off a stellar session in which the Dow surged nearly 600 points, while the S&P 500 snapped a three-day losing streak.

In economic data, consumers continued to spend in February through at a slower pace than expected, according to a Commerce Department report Wednesday. Advance retail sales grew 0.3% for the month, slightly below the 0.4% Dow Jones estimate.

To be sure, all eyes are on the Fed on Wednesday, as the central bank wraps up a key two-day policy meeting.

The Fed is widely expected to raise rates by a quarter-point, the first hike since 2018. Watchers are also expecting the central bank to offer a new quarterly forecast that could indicate five or six more hikes this year.

"My guess is it's going to sound a little more hawkish than people want it to sound, and that's going to be a little tough to digest, particularly in the fixed income markets," David Zervos, chief market strategist at Jefferies told CNBC's "Closing Bell" on Tuesday. "I think the equity market might digest it a little bit better, but it's going to be a tough swallow."

The Fed is expected to announce an interest rate decision and economic projections at 2 p.m. on Wednesday, which will followed by a briefing from Federal Reserve Chair Jerome Powell.