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Durable Goods Orders Come in Nearly at a Three-Year Low

A fresh economic report is out this morning, though this one more likely would help bolster quarterly Gross Domestic Product (GDP) than interest rate levels: Durable Goods Orders for January came in at their lowest tally since the depth of the Covid market in April 2020: -4.5%. This is at least a half-point lower than analysts were expecting, and a big swing lower from the previous month’s +5.6%. These figures are preliminary, by the way, and subject to future revisions.

Looking beneath the headline, these Durable Goods numbers are all over the place. While ex-Transportation came in at their highest point since March 2022, +0.7% month over month, ex-Defense came in -5.1%. This would suggest a lot of excess military-oriented hard goods delivered for the month, but non-defense, ex-aircraft (a proxy for general capital business expenditures) reached +0.8% for January, well ahead of the expected unchanged level month over month.

Shipments, on the other hand, came in solidly higher at +1.1% last month, which is the best figure reported since October of last year. So while GDP may get a boost from these numbers in the first month of the quarter, otherwise we’re clearly in flux regarding durables. To the extent we may determine demand, even as higher prices continue to keep inflation metrics aloft, it would not appear from here that we’re seeing much in the way of demand destruction.

Pre-market futures are quite happy with these results: the Dow went from +156 points directly before the print to +227 points minutes afterward. The S&P 500 rose from +21 to +36 points, and the Nasdaq accelerated more than 50 points on the news: +81 to +132 points at this hour. Over the past week of trading, we’re down anywhere from -1.5% (S&P) to -2.0% (Dow). For the past month, we’re still in the red across the board, though year to date only the Dow is in negative territory; the Nasdaq remains +10.9% and the small-cap Russell 2000 is +8.5% from the first of the year.

After today’s opening bell, Pending Home Sales for January will be released. Last month, we saw a second-straight improvement, +2.5%, though off very low lows. December year over year pending home sales was -33.8%; this remains a lower trough than at any time in this metric’s 20-year history — even worse than the swift plummet we saw at the onset of the pandemic. We’ll see if we continue to retrace back to that previous all-time low today.

Finally, Pfizer PFE is reportedly in the works to buy out Seagen SGEN, a U.S. biotech focused on antibody-based cancer treatments. Preliminary reports are bandying about a $30 billion price tag, but clearly we’re quite early in this process. We also might expect high scrutiny from current regulatory bodies, which may possibly put a damper on the deal before it really gets going. That said, Seagen shares are +14% in today’s pre-market, while Pfizer is -1.3%.

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