Market rise after a government budget deal is ready

Dow jumped 320 (near session highs), advancers over decliners 2-1 & NAZ gained a more modest 63.  The MLP index added 1+ to 281 & the REIT index was steady in the 378s.  Junk bond funds were little changed & Treasuries rose which drove yields lower.  Oil was fractionally higher to the 83s & gold fell 4 to 2159 for the contract which expired (more on both below).

AMJ (Alerian MLP Index tracking fund)

Congressional negotiators have struck a deal on how to fund the gov for the remainder of FY24, ending a brutal political fight that has dragged on for almost a year.  In the coming days, lawmakers are expected to release text of a "minibus" appropriations package combining 6 separate funding bills, which will then need to pass votes in the House & Senate before being signed into law by Pres Biden.  The previous 6, making a total of 12, were passed earlier this month.  The announcement comes after multiple sources said that 5 of 6 bills were ready as of Mon, but that disagreements remained over legislation to fund the Dept of Homeland Security (DHS).  A senior House GOP leadership aide said the remaining issues, which they said involved funding levels and policy, were resolved last evening.  "An agreement has been reached for DHS appropriations, which will allow completion of the FY24 appropriations process. House and Senate committees have begun drafting bill text to be prepared for release and consideration by the full House and Senate as soon as possible," Speaker Mike Johnson announced today.  The tranche of bills will include funding for the Dept of Defense, Homeland Security, State Dept & foreign operations, the legislative branch, Health & Human Services & the Dept of Education.  House lawmakers on the GOP whip team were told to expect possible votes on the minibus Thurs or Fri.  The topic of how to fund the gov has fractured the House GOP's perilously thin majority.  Rep hardliners have called for leveraging a gov shutdown in order to force the Dem-controlled Senate & White House to agree to conservative policy wins.  They have even tried to weaponize normally-sleepy procedural votes to halt House floor proceedings & embarrass members of their own party by tanking Rep messaging bills.

Congress announces government funding deal, readies to end monthslong government shutdown battle

Nordstrom (JDS) shares jumped following a report that the department store chain is attempting to go private.  The retailer's founding family is working with investment bank Centerview Partners to determine if private equity firms have interest in a deal according to sources.  However a deal still might not happen.  A previous effort to take JDS private fizzled out in 2018.  JDS has struggled to drive sales in a competitive retail landscape where consumers squeezed by inflation have been watching their spending on apparel & other discretionary goods.  Earlier this month, the company gave a gloomy sales outlook for 2024.  JDS expects full-year revenue to range from a 2% decline to a 1% increase from 2023.  The stock rose was up 1.60 on the news.

Nordstrom shares jump more than 10% on report retailer is trying to go private

Microsoft (MSFT), a Dow stock, has hired former Mustafa Suleyman, a co-founder of artificial intelligence startup DeepMind that Google (GOOG) acquired in 2014, to lead Copilot AI initiatives.  Suleyman will become an exec VP & CEO of MSFT AI, reporting to CEO Satya Nadella.  Inside GOOG, DeepMind became a leader in AI research, receiving placement for its work in the journal Nature & extensive media attention.  Suleyman left GOOG parent Alphabet in 2022 & became co-founder & CEO of startup Inflection AI.  Karén Simonyan, a co-founder of Inflection & its chief scientist, is joining MSFT as chief scientist for MSFT AI, alongside “several” of the startup's employees.  The new MSFT AI group will work on the Copilot chatbot, which appears in Bing, Windows & other company products.  Consumer AI products & research will also fall under the group.  Mikhail Parakhin, CEO of advertising & web services & head of the team developing Copilot, Bing & Edge, will join the new organization under Suleyman, Nadella wrote.  So will Misha Bilenko, corp VP of MSFT generative AI.  “I’ve known Mustafa for several years and have greatly admired him as a founder of both DeepMind and Inflection, and as a visionary, product maker, and builder of pioneering teams that go after bold missions,” Nadella wrote.  MSFT stock rose 4.09.

Microsoft hires DeepMind co-founder Mustafa Suleyman as CEO of new AI unit

Gold closed lower with the $ strengthening as the 2-day meeting of the Federal Reserve's policy committee began.  Gold for Jun closed down $4 to settle at $2181 per ounce.  The Federal Open Markets Committee meeting began today & is widely expected to leave interest rates unchanged when the meeting ends tomorrow with a press conference by Fed chair Jerome Powell.  The central bank is ignoring pleas from traders to begin cutting rates as a number of inflation measures show it remains above the Fed's 2% target.  However the market will be watching closely for hints on when cuts could begin.  The $ was sharply higher with rates high.  The ICE dollar index was last seen up 0.4 points to 103.83, making gold more expensive for intl buyers.  Treasury yields weakened, bullish for the precious metal since it offers no interest.  The 2-year note was last seen paying 4.704%, down 4.3 basis points, while the yield on the 10-year note was down 3.3 basis points to 4.301%.

Gold Closes Down as the Dollar Moves Higher with the Fed Expected to Leave Interest Rates Unchanged

Oil prices settled higher, driven by optimism about tighter markets this year following softer exports from Iraq & Saudi Arabia.  The US crude futures (WTI) settle 0.9% higher at $83.47 a barrel & the Brent contract rose 0.6% to $87.38 a barrel.  Oil prices have surged over the past week as signs of increased US refinery activity, improved Chinese demand & persistent disruptions in the Middle East presented a tight outlook for oil markets.  This notion was furthered by Iraq, the 2nd biggest producer in the Organization of Petroleum Exporting Countries, stating that it will cut crude exports to compensate for higher production so far in 2024.  The move is primarily to absorb the oversupply from Jan 2024-Feb 2024 & to showcase the nation's commitment to stick to its voluntary oil cuts as part of the OPEC+ agreement.  Recent OPEC+ numbers showed that Iraq pumped 0.2m b/d of oil above its agreed quota of 4m b/d last month.  Data from Saudi Arabia also showed crude exports from OPEC's biggest producer fell for a 2nd straight month in Jan.  In Russia, Ukrainian attacks put a key fuel refinery out of commission.

Oil Prices Settle Higher on Tight Supply Outlook; Fed Decision Eyed

It appears that Congress has agreed to fund the gov for the balance of the year ending on Sep 30, a sign of relief for some investors.  Dow has been going sideways for more than a month (see below), looking for some reason for the bulls to take it to new heights.  Meanwhile safe heaven gold is also in record territory.  Tomorrow the Fed & its post meeting report will be the center of attention for everybody.

Dow Jones Industrials