Markets jump on hopes for diplomacy with Russia

Dow skyrocketed 834, advancers over decliners 4-1 & NAZ advanced 221.  The MLP index rose 3+ to the 197s & the REIT index recovered 9+ to the 457s.  Junk bond funds continued higher & Treasuries had some selling bringing higher yields.  Oil slid back to 92 & gold sank 34 to 1891 (more on both below).

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The Census Bureau's latest data showed new orders for transportation durable goods jumped $4.3B (1.6%) to $277.5B, double the expectations for a 0.8% rise.  Excluding transportation, new orders were up 0.7%, beating the estimate of 0.4%.  Revised numbers from Dec showed a 1.2% increase in durable goods orders for items like computers, washing machines, & other equipment expected to last more than 3 years, after last month's report showed a decrease of 0.7%.  Today's report indicated that a surge in transportation equipment, now up 3 months in a row, led the increase with a 3.4% surge of $2.9B, totaling $87.6B in Jan.  Shipments of durable goods have risen 8 of the last 9 months, up 1.2% to $270.4B last month after a 1.3% increase in Dec.  The increase in Jan was led by shipments of machinery, which have climbed 10 of the last 11 months.

Durable goods orders jump much higher than expected

Pending home sales fell for the 3rd month in a row in Jan, amid all-time low inventory & sky-high prices.  The latest data from the National Association of Realtors (NAR) shows contract signings for home sales dropped 5.7% last month, when the number of available homes on the market hit a record low of 860K units.  "With inventory at an all-time low, buyers are still having a difficult time finding a home," said NAR chief economist Lawrence Yun.  The Pending Home Sales Index showed a decline in sales across 3 of the 4 major regions in the US with sales in the West actually seeing a boost last month.  Pending home sales dropped by 12.1% in the Northeast in Jan, 6.3% in the South & 5.9% in the Midwest.  The West saw contracts increase by 1.5%.  Year over year, total sales fell by 9.5%, with all regions posting declines.  "Given the situation in the market – mortgages, home costs and inventory – it would not be surprising to see a retreat in housing demand," Yun added.  Mortgage interest rates have been on a steady climb, with the average 30-year fixed-rate product hitting 4.06% this week – nearly a full percentage point higher than where it sat a year ago according to the Mortgage Bankers Association.  The MBA's latest numbers indicate a 13.1% drop in mortgage applications from a week ago, while the average loan size has hovered around $453K.

Pending home sales slump

The North Atlantic Treaty Organization NATO) agreed to activate its NATO Response Force for the first time ever in a defensive capacity to respond to the Russian invasion of Ukraine, Secretary General Jens Stoltenberg told reporters.  The NATO Response Force consists of 40K highly trained & combat ready soldiers from NATO countries, but Stoltenberg said only part of the force was being called up.  In a separate statement, NATO Supreme Allied Commander Gen Tod Wolters said the alliance has “operationally aligned its maritime, land, air, space & cyber forces to defend our NATO sovereignty.”  Wolters said the troops “represent a flexible, combat credible force that can be employed in multiple ways and we are utilizing fully their inherent agility.”  “As NATO establishes this enhanced vigilance on the alliance’s eastern flank, allied military forces will posture and exercise to increase our readiness and interoperability,” he said.  “Your soldiers, sailors, airmen, and marines stand ready to protect every meter of Allied territory.”  The announcement followed an emergency meeting today of the leaders of all NATO member states, as well as the leaders of Sweden, Finland & the EU.  Pres Biden has pledged that he will not send American troops into Ukraine, which is not a member of NATO.  But as fighting in Ukraine intensifies, NATO states bordering the besieged country are on high alert.

NATO readies response force as Russia assaults Ukraine, threatens Finland

Gold moved lower, with prices poised to post their first weekly loss in 4, pressured by a higher reading on US inflation as investors keep an eye on the conflict in Eastern Europe.  Russia said it was willing to send a delegation to Minsk, Belarus, for talks with Kyiv.  The news help to ease haven demand for gold.  Apr gold was down $39 (2.1%) lower at $1886 an ounce, following a 0.8% gain for bullion yesterday.  The metal had touched on intraday high on that session at $1976 — the highest for a most-active contract since Sep 2020.  For the week, the most-active gold contract was headed for a loss of 0.7%, the first weekly loss in 4 weeks.  Among the US economic data today, the Federal Reserve's favorite inflation calculator rose by 0.6% in Jan.  The increase in the personal consumption expenditure price index points to still-intense inflationary pressures in the US economy, with the gauge having climbed 6.1% in the past year to mark the fastest rate since 1982.  Also, the reading on consumer spending rebounded in Jan & increased by a sharp 2.1% — more than the 1.6% gain expected.  Meanwhile, orders for durable goods rose 1.6% last month, compared with the 0.8% rise expected.  Despite the day's pullback, gold enthusiasts see gold holding a compelling case for prospective investors in a diversified portfolio, particularly as the clash in Eastern Europe continues.  Today, Russian forces closed in the capital of Kyiv & Ukranian Pres Volodymyr Zelensky vowed not to surrender the city, which was coming under fire from Moscow.

Gold ends lower, marks first weekly decline since January on Russia-Ukraine developments

Oil futures declined as investors continued to monitor Russia's invasion of Ukraine, a day after crude briefly topped the $100-a-barrel threshold for the first time in over 7 years.  News reports said Russia was in favor of talks with Ukraine pressured prices, though few details were available & traders remained cautious.  West Texas Intermediate crude for Apr fell 65¢ (0.7%) to $92.16 a barrel.  The US benchmark yesterday hit an intraday high of $100.54.  It trades about 2% higher for the week.  Apr Brent crude, the global benchmark, was down $1.44 (1.5%) at $97.64 a barrel.  The contract, which trading as high as $105.79 yesterday, is up over 4% for the week.  The more actively traded May contract fell $1.05 (1.1%) to $94.37 a barrel.  Crude drifted lower after news reports, citing a summary of a call between Russian Pres Vladimir Putin & Chinese leader Xi Jinping provided by China's Foreign Ministry, said Russia was ready to conduct negotiations with Ukraine.  Yesterday oil ended with gains but well off session highs above $100 a barrel, with the pullback tied to relief that a new round of sanctions announced by the US & its allies against Moscow didn't target Russia's energy exports or cut the country off from the SWIFT payment system.

Oil pares weekly gain as traders weigh market risks tied to Russian invasion of Ukraine

Buyers returned to bid prices higher off depressed lows.  There is a lot of pressure on Russia from countries & companies which do business in Russia.  The Ukrainians also also putting up a spirited defense.  Chances are great that Russia will continue its fight in the Ukraine next week which will be a major driver for the stock market.  After the 2 day rally, Dow finished down 20 for the week, but is still 1000 lower in Feb.

Dow Jones Industrials