Tech leads gains as jobless claims hit lows since September '22

Stocks were higher on Thursday, with technology stocks leading the gains. Jobless claims fell to their lowest level since September 2022. Tech stocks were supported by solid earnings from TSMC, and AAPL had a strong day following an analyst upgrade. The passing of the government stopgap funding bill in the Senate and positive forecasts for the Fed’s inflation battle also contributed to the market’s strength. Treasuries bear-steepened as duration failed to recover after the drop in jobless claims. Oil prices rose amid mixed inventory data and geopolitical risks.

PHILLY FED

The Philly Fed Business Index improved in January but not as much as expected. New orders and employment showed improvement, while the inflationary gauge of prices paid declined. Future activity indicators declined, suggesting less widespread expectations for overall growth over the next six months. Firms expect smaller cost increases for 2024.

JOBLESS CLAIMS

Initial jobless claims fell to their lowest level since September 2022, beating expectations of a rise. Analysts suggest the low level of claims could be skewed by recent cold weather. The decline in claims suggests progress in the labor market without an increase in layoffs.

HOUSING STARTS

US housing starts eased in December but remained above expectations. Single-family starts fell while starts for buildings with five units or more rose. Building permits rose and authorizations for units also increased. Analysts expect the steady uptrend in single-family construction to continue.

FIXED INCOME

Treasuries bear-steepened as the long end failed to recover after the drop in jobless claims. Inflation breakevens rose.

THE DAY

Treasuries saw a feeble recovery before falling after the release of jobless claims, the Philly Fed survey, and housing starts and permits figures. T-Notes hit a session peak before tumbling to new lows. A strong 10-year TIPS auction capped the losses.

Friday will see the release of the Michigan consumer survey, existing home sales, TIC flows, and remarks from Fed officials. Japanese CPI, German PPI, and UK retail sales will also be released.