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This holiday-shortened week, we’ve continued to roll off Friday’s highs — which happen to be peak 2023 stock market thus far for the year. Perhaps a too-early celebration that the Fed’s cycle of interest-rate hikes has finally come to an end is being successfully walked-back by Fed presidents and Fed Chair Powell himself, but it’s likely that valuations would have started to become considered anyway, especially with such little on the docket in terms of forceful economic reports this week.
In any case, we’re down again in the major indices a little more than an hour ahead of the opening bell: -84 points on the Dow, -43 on the Nasdaq and -10 points on the S&P 500. However, after new weekly jobless claims data this morning, these figures have ebbed slightly toward the positive: -55 on the Dow, -25 on the Nasdaq and -5 on the S&P. (We don’t think this move reflects much on the U.S. Current Account Balance, which was slightly worse than expected to -$219 billion.)
Initial Jobless Claims for last week came in at 264K — the highest level since October 2021. Actually, the previous week’s revision also moved from 262K to 264K, so its back-to-back 20-month highs. In any case, we are finally seeing some softness in the labor market emerging — something economists have been expecting for months now — as we’re now pretty clearly at a new leg up in new claims over the past three weeks; prior to that, we were printing a rough average of 230K new claims per week.
However, Continuing Claims are still not fully reflecting this new trend: 1.759 million reported this morning is still sub-1.8 million (a psychological number indicating a still-strong labor market; actually, sub-2 million can be considered historically strong), as is the previous week’s slight downward revision to 1.772 million. Now, as we know, longer-term jobless claims are reported a week in arrears from new claims, but even still, by now we’d expect these numbers to rise on the longer-term end. Perhaps we continue to experience a labor market so strong that folks being laid off are finding new jobs right away?
After today’s open, we’ll see new reports on Existing Home Sales and Leading Economic Indicators, both for May. Neither is likely to have the gravitational pull on the Fed’s attention that last week’s CPI or next week’s PCE reports do, but both will help sketch out our budding narratives — especially the home sales figures. Expectations are for a slight dip month over month, but as we’ve seen in other housing data this week — a stronger Homebuilders Survey and Housing Starts data, as well as a big earnings beat for KB Home (KBH - Free Report) yesterday — the housing market looks to be emerging despite higher mortgage rates.
We’ll also hear from Fed Chair Powell as he appears for the second day on Capitol Hill, this time before the Senate Banking Committee. Expect a further reiteration that interest rate hikes are not necessarily a thing of the past, as he mentioned explicitly yesterday before a House panel. Fed Presidents Loretta Mester (Cleveland) and Tom Barkin (Richmond, VA) also make appearances later this morning.
Image: Bigstock
New Jobless Claims 264K, Highest in 20 Months
Thursday, June 22nd, 2023
This holiday-shortened week, we’ve continued to roll off Friday’s highs — which happen to be peak 2023 stock market thus far for the year. Perhaps a too-early celebration that the Fed’s cycle of interest-rate hikes has finally come to an end is being successfully walked-back by Fed presidents and Fed Chair Powell himself, but it’s likely that valuations would have started to become considered anyway, especially with such little on the docket in terms of forceful economic reports this week.
In any case, we’re down again in the major indices a little more than an hour ahead of the opening bell: -84 points on the Dow, -43 on the Nasdaq and -10 points on the S&P 500. However, after new weekly jobless claims data this morning, these figures have ebbed slightly toward the positive: -55 on the Dow, -25 on the Nasdaq and -5 on the S&P. (We don’t think this move reflects much on the U.S. Current Account Balance, which was slightly worse than expected to -$219 billion.)
Initial Jobless Claims for last week came in at 264K — the highest level since October 2021. Actually, the previous week’s revision also moved from 262K to 264K, so its back-to-back 20-month highs. In any case, we are finally seeing some softness in the labor market emerging — something economists have been expecting for months now — as we’re now pretty clearly at a new leg up in new claims over the past three weeks; prior to that, we were printing a rough average of 230K new claims per week.
However, Continuing Claims are still not fully reflecting this new trend: 1.759 million reported this morning is still sub-1.8 million (a psychological number indicating a still-strong labor market; actually, sub-2 million can be considered historically strong), as is the previous week’s slight downward revision to 1.772 million. Now, as we know, longer-term jobless claims are reported a week in arrears from new claims, but even still, by now we’d expect these numbers to rise on the longer-term end. Perhaps we continue to experience a labor market so strong that folks being laid off are finding new jobs right away?
After today’s open, we’ll see new reports on Existing Home Sales and Leading Economic Indicators, both for May. Neither is likely to have the gravitational pull on the Fed’s attention that last week’s CPI or next week’s PCE reports do, but both will help sketch out our budding narratives — especially the home sales figures. Expectations are for a slight dip month over month, but as we’ve seen in other housing data this week — a stronger Homebuilders Survey and Housing Starts data, as well as a big earnings beat for KB Home (KBH - Free Report) yesterday — the housing market looks to be emerging despite higher mortgage rates.
We’ll also hear from Fed Chair Powell as he appears for the second day on Capitol Hill, this time before the Senate Banking Committee. Expect a further reiteration that interest rate hikes are not necessarily a thing of the past, as he mentioned explicitly yesterday before a House panel. Fed Presidents Loretta Mester (Cleveland) and Tom Barkin (Richmond, VA) also make appearances later this morning.
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