In yesterday’s data, Initial Jobless Claims were 196,000 for the week ending February 4th, slightly higher than expectations and higher than the previous week. Continuing Claims were 1,688,000 for the week ending January 28th, also a bit higher than expected and higher than the previous week’s revised figure. Meanwhile, the quarterly earnings season is in full swing with more than 280 companies of the S&P 500 reporting results. Approximately 30% of those companies have revised their future guidance lower, compared to only 22% that have revised it higher. Of the over 102,000 job cuts announced in January, roughly 41% are from the technology sector, including Alphabet who announced 12,000 layoffs.
Overall, a lasting resilience in the labor market is still apparent as initial claims remain very low. However, continuing claims have moved higher in recent months and some companies have reduced their guidance as part of their earnings reports. Layoffs have also been announced, with a large portion occurring in the technology sector. This push and pull between data points within the labor market highlights the challenge of cross currents within the economy, even as the Federal Reserve remains diligent in keeping rates higher for longer to fight inflation. The ongoing race between falling inflation and when deterioration in the labor market could materialize will be closely monitored by market participants in the weeks ahead.
In all, the yield on the 10-year US treasury is little changed and equity futures are lower as we head into the market open.
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