U.S. stock market not afraid of Putin

U.S. stocks climbed a second day and Treasuries pared gains as housing data bolstered confidence in the economy and Russia’s Vladimir Putin said he isn’t seeking to split up Ukraine. Gold fell amid a Federal Reserve meeting.

The Standard & Poor’s 500 Index(CME:SPM14) rose 0.6 percent at 11:29 a.m. in New York, sending the benchmark gauge to within eight points of a record close. The Stoxx Europe 600 Index advanced 0.9 percent. Russian shares added 4.1 percent, capping the biggest two-day gain in almost four years. The yield on 10-year Treasuries rose 1 basis point to 2.68 percent and the yen strengthened 0.3 percent. Gold dropped 1.1 percent while oil jumped 1.1 percent.

Russia wishes no harm to Ukraine, Putin told parliament in a speech today, after ordering the approval of Crimea’s accession to Russia. The Fed will press on with cuts to stimulus and switch to qualitative guidance for assessing rates, according to economists ahead of the central bank’s two-day meeting. U.S. housing starts were little changed in February while building permits climbed.

“We’ve got a more congenial Russian message this morning and we got better economic reports here in the States,” John Augustine, chief market strategist at Cincinnati-based Fifth Third Bancorp, said in a phone interview. His firm oversees $28.2 billion. “The building permits report was very bullish for the spring and summer housing season. Today, we move back to better economic reports and focusing on the Fed.”

Putin supported a request from Ukraine’s separatist region of Crimea to join Russia, defying U.S. and European Union sanctions. Crimea voted on March 16 to leave Ukraine and become a part of Russia. The regional parliament called the plebiscite after Ukrainian President Viktor Yanukovych fled the country following protests against his rule.

“We don’t want to split up Ukraine, we don’t need that,” the Russian president said in a speech to parliament. “Don’t believe those who scare you with Russia, who yell that Crimea will be followed by other regions.”

Economic Data

The S&P 500 rallied 1 percent yesterday, rebounding from its worst week since January, as a measure of industrial production grew more than forecast. The index is near a record of 1,878.04 reached March 7.

“People are breathing a sigh of relief to the extent that Russian troops aren’t moving around,” Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors, said in a phone interview. His firm oversees about $82 billion. Economic data “was sort of little-changed to us, but at least it wasn’t a lot worse. People have been looking at a lot of negatively influenced numbers and thinking we may starting to get a little past that,” he said.

Housing Starts

Housing starts in the U.S. were little changed in February after declining less than previously estimated a month earlier, data showed today, indicating the home-building industry is stabilizing after bad winter weather curbed construction. Permits filed for future projects increased 7.7 percent to a 1.02 million pace in February, the most since October and reflecting a surge in applications for apartment-building construction.

Another report showed the cost of living in the U.S. was little changed in February, showing inflation is making scant progress toward the Fed’s goal ahead of the policy makers’ meeting this week.

Fed officials have said they will probably hold the bank’s target interest rate near zero “well past the time” that unemployment falls below 6.5 percent, “especially if projected inflation” remains below its longer-run goal of 2 percent.

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