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Investors woke up this morning to what appeared like a pending disaster in pre-markets, less than a day after both the S&P 500 and Nasdaq closed at new record highs. We’re off the lows seen roughly 90 minutes before the opening bell, but we’re still down 480 points on the Dow, 60 on the S&P and 200 on the Nasdaq. Bitcoin is off -6% so far this morning, with Oil notching its thirds day lower, -1%.
This drop looked to analysts at first like a “growth scare” — our markets have gone up very high, very fast — and the pullback, on no concrete news item aside from perhaps the 10-year bond yield tumbling to below 1.26% for a time, is asserting a correction of sorts. Consider that we’re currently back to our trading levels seen just in late June, when everything was up, up, up, and it becomes a bit clearer why investors are booking profits here.
Apple (AAPL - Free Report) , which had been the biggest gainer of the FAANG stocks over the past couple weeks, is -2%. Airlines, coming down from the euphoria about travel plans being made in the Great Reopening, like American (AAL - Free Report) and United (UAL - Free Report) , are -3%. Carnival Cruise Lines (CCL - Free Report) is even worse, -5%. All the Big Banks, from JPMorgan (JPM - Free Report) to Wells Fargo (WFC - Free Report) , have dropped -2% in today’s pre-market.
An initial reaction may be that this is an excellent time to go shopping for great companies that looked a bit too pricey as recently as yesterday. But that 10-year yield, now 1.29% but still lower than we’ve seen since February, might require a bit more explanation, and this may be hard to come by. The European markets, which are now following the U.S.’s lead in highly accommodative monetary policy, were down -2% today, but that can’t be the catalyst, can it?
Might it have something to do with China’s crackdown on cryptocurrency? Even with Bitcoin -6% so far this morning, this seems a reach. Or maybe it has something to do with the Delta variant of the Covid-19 coronavirus potentially wreaking havoc on under-vaccinated regions of the U.S. and around the world, which may lead to a new flare-up in the disease and even contribute to a newer, even worse variant developing down the road?
Perhaps we’re looking in the wrong places. Is the 10-year yield still in an uptrend overall? In fact, it is — though just barely. That big lump from this spring which took yield rates above 1.7% for a time, and caused fears on the other side — that we were racing too high too fast on the inflation front — looks completely erased as of now.
Meanwhile, Thursday morning Initial Jobless Claims came in higher than expected: 373K versus an expected post-Covid low 350K, up 2000 claims from last week’s upwardly revised 371K, which is now the current post-Covid low. This would suggest a bit of a plateau in jobless claims, which have come way down over the past 12 weeks but have been between 370K-420K for the past seven of those weeks.
Continuing Claims, posted a week in arrears, did notch a new post-Covid low to 3.34 million this morning, nicely below the previously reported 3.47 million. This is still not where we were prior to the pandemic, though we have ratcheted down below 4 million over the past 12 weeks. Keep in mind, when looking at these jobless claims, that roughly two dozen states have removed their Covid-based unemployment insurance, which they felt would push more Americans into the workforce.
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Weekly Jobless Claims Higher-Than-Expected
Investors woke up this morning to what appeared like a pending disaster in pre-markets, less than a day after both the S&P 500 and Nasdaq closed at new record highs. We’re off the lows seen roughly 90 minutes before the opening bell, but we’re still down 480 points on the Dow, 60 on the S&P and 200 on the Nasdaq. Bitcoin is off -6% so far this morning, with Oil notching its thirds day lower, -1%.
This drop looked to analysts at first like a “growth scare” — our markets have gone up very high, very fast — and the pullback, on no concrete news item aside from perhaps the 10-year bond yield tumbling to below 1.26% for a time, is asserting a correction of sorts. Consider that we’re currently back to our trading levels seen just in late June, when everything was up, up, up, and it becomes a bit clearer why investors are booking profits here.
Apple (AAPL - Free Report) , which had been the biggest gainer of the FAANG stocks over the past couple weeks, is -2%. Airlines, coming down from the euphoria about travel plans being made in the Great Reopening, like American (AAL - Free Report) and United (UAL - Free Report) , are -3%. Carnival Cruise Lines (CCL - Free Report) is even worse, -5%. All the Big Banks, from JPMorgan (JPM - Free Report) to Wells Fargo (WFC - Free Report) , have dropped -2% in today’s pre-market.
An initial reaction may be that this is an excellent time to go shopping for great companies that looked a bit too pricey as recently as yesterday. But that 10-year yield, now 1.29% but still lower than we’ve seen since February, might require a bit more explanation, and this may be hard to come by. The European markets, which are now following the U.S.’s lead in highly accommodative monetary policy, were down -2% today, but that can’t be the catalyst, can it?
Might it have something to do with China’s crackdown on cryptocurrency? Even with Bitcoin -6% so far this morning, this seems a reach. Or maybe it has something to do with the Delta variant of the Covid-19 coronavirus potentially wreaking havoc on under-vaccinated regions of the U.S. and around the world, which may lead to a new flare-up in the disease and even contribute to a newer, even worse variant developing down the road?
Perhaps we’re looking in the wrong places. Is the 10-year yield still in an uptrend overall? In fact, it is — though just barely. That big lump from this spring which took yield rates above 1.7% for a time, and caused fears on the other side — that we were racing too high too fast on the inflation front — looks completely erased as of now.
Meanwhile, Thursday morning Initial Jobless Claims came in higher than expected: 373K versus an expected post-Covid low 350K, up 2000 claims from last week’s upwardly revised 371K, which is now the current post-Covid low. This would suggest a bit of a plateau in jobless claims, which have come way down over the past 12 weeks but have been between 370K-420K for the past seven of those weeks.
Continuing Claims, posted a week in arrears, did notch a new post-Covid low to 3.34 million this morning, nicely below the previously reported 3.47 million. This is still not where we were prior to the pandemic, though we have ratcheted down below 4 million over the past 12 weeks. Keep in mind, when looking at these jobless claims, that roughly two dozen states have removed their Covid-based unemployment insurance, which they felt would push more Americans into the workforce.