Thread: America's biggest boom since 1946

S&P 500 closes at all-time high ahead of Christmas as investors shrug off Omicron

The S&P closed at an all-time high of 4,725.72

In other news……..

US jobless claims show no sign of rising even as Omicron spreads

Applications for state unemployment benefits in the United States were unchanged last week, signalling that the labour market continues to recover even as the Omicron variant of the coronavirus spreads across the country.

Initial jobless claims – a proxy for layoffs – were little changed at a seasonally adjusted rate of 205,000 for the week ended December 18, the US Labor Department said on Thursday.

That is still below pandemic levels and a sign that the Omicron strain has yet to hit the jobs market even as it threatens to bring back some restrictions.

So what was a crisis of layoffs is now a crisis of shortage of workers. Many of those who were either let go or walked off the job could be staying on the sidelines for a host of reasons: fear of contracting COVID, a lack of childcare options, trying their hand at opening their own business, or deciding to take early retirement thanks to swelling home and stock prices.

There were a near-record 11 million job openings at the end of October. The current unemployment rate is at a 21-month low of 4.2 percent – closing in fast on the pre-pandemic level of 3.5 percent.

U.S. weekly jobless claims unchanged at 205,000; consumer spending rises in November

• S&P 500 closes at record, Dow adds 350 points

U.S. stock indexes rose Monday as markets reopened after the Christmas holiday and investors assessed the spread of the omicron Covid-19 variant.

The S&P 500 gained nearly 1.4% to close at 4,791.19, marking its 69th record close of the year. The index also hit an intraday record for the first time in more than a month. The Dow Jones Industrial Average added 351.82 points, or roughly 1%, at 36,302.38. The Nasdaq Composite ticked up about 1.4% to 15,871.26.

Market strategists remained positive on the overall equity outlook amid a surge in Covid cases.

• Despite supply issues and omicron, holiday sales rise 8.5%

Holiday sales rose at the fastest pace in 17 years, even as shoppers grappled with higher prices, product shortages and a raging new COVID-19 variant in the last few weeks of the season, according to one spending measure.

Mastercard SpendingPulse, which tracks all kinds of payments including cash and debit cards, reported Sunday that holiday sales had risen 8.5% from a year earlier. Mastercard SpendingPulse had expected an 8.8% increase.

The results, which covered Nov. 1 through Dec. 24, were fueled by purchases of clothing and jewelry.

Holiday sales were up 10.7% compared with the pre-pandemic 2019 holiday period.

By category, clothing rose 47%, jewelry 32%, electronics 16%. Online sales were up 11% from a year ago and 61% from 2019. Department stores registered a 21% increase over 2020.

After omicron hit, some consumers stayed home and shifted their spending to e-commerce -- but sales stayed strong. “I feel really good about how the season played out,” said Steve Sadove, senior adviser to Mastercard and former CEO of Saks Inc. “When people feel a little bit uncomfortable, you’ll see a little bit of a pickup in online and a little bit of a slowdown in store performance.’’

A broader picture will be revealed next month when the National Retail Federation, the nation’s largest retail trade group, comes out with its combined two-month results in mid-January. The results will be based on an analysis of the November and December sales figures from the Commerce Department. Analysts will also be dissecting the fourth-quarter financial results from different retailers that are slated to be released in February.

S&P 500 and Dow close at record highs

The S&P 500 and Dow Jones Industrial Average each soared to records on Wednesday, as the Dow extended its winning streak into a sixth day and the S&P 500 resumed a previous rally after wavering in intraday trading.

After struggling to stay afloat during the session, the S&P closed up 0.14% to an all-time high and its 70th record close of the year at 4,793.06, while the Dow hit 36,488.63.

US unemployment claims drop to 198,000

The number of Americans applying for unemployment benefits fell below 200,000, more evidence that the job market remains strong in the aftermath of last year's coronavirus recession.

Jobless claims dropped by 8,000 to 198,000, the Labor Department reported Thursday. The four-week average, which smooths out week-to-week volatility, fell to just above 199,000, the lowest level since October 1969.

The unemployment rate has fallen to 4.2%, close to what economists consider full employment.

“The overall picture painted by these data points to a rapid pace of job growth,'' said Joshua Shapiro, chief U.S. economist at the consulting firm Maria Fiorini Ramirez Inc. Hiring would have been even stronger “had businesses been able to hire as many workers as they wished.''

Weekly jobless claims total 198,000

• Wall Street ends tumultuous year near record highs

NEW YORK, Dec 31 (Reuters) - Wall Street closed near record highs in light trading on Friday, the last trading day of 2021, marking the second year of recovery from a global pandemic.

All three major U.S. stock indexes scored monthly, quarterly and annual gains, notching their biggest three-year advance since 1999.

The S&P 500 gained 27% since the last trading day of 2020. Through Thursday, the benchmark index has registered 70 record-high closes, or the second-most ever. Using Refinitiv data back to 1928, the most record-high closes for the S&P 500 in a single year was 77 in 1995.

The Dow added 18.73% for the year, and the Nasdaq gained 21.4%.

Companies, consumers and the broader economy largely thrived in 2021 as they felt their way forward amid a constantly shifting landscape including a tumultuous transfer of power marked by the Jan. 6 Capitol riot. Other factors included the "meme stock" phenomenon, new COVID-19 variants, a labor shortage, generous fiscal/monetary stimulus, hobbled supply chains, booming demand and the resulting price spikes.

"What stands out to us this year among all the negatives, is the resiliency of Corporate America," said Ryan Detrick, chief market strategist at LPL Financial in Charlotte, North Carolina. "In a sea of uncertainty and higher prices, you have to be extremely impressed by how agile and adaptive Corporate America was to sport 45% earnings growth in a very difficult year."

Indeed, earnings results from S&P 500 companies blew past analyst estimates to deliver year-on-year growth in the first three quarters of the year of 52.8%, 96.3% and 42.6%, respectively, according to Refinitiv, which currently sees fourth-quarter annual earnings growth of 22.3%.

Energy (.SPNY), real estate (.SPLRCR) and microchips (.SOX), sectors associated with economic recovery and booming demand, were among 2021's top performers, with growth stocks' (.IGX) 31% advance handily outperforming the 22% gain in value (.IVX) stocks.

Market-leading tech and tech-adjacent megacap stocks, which outperformed the broader market in the first year of the global health crisis, were laggards as the economy slowly reopened and vaccines were deployed.

The NYSE FANG+ index (.NYFANG), an equal-weighted group of 10 such stocks, notched a nearly 20% advance on the year. Google parent Alphabet Inc (GOOGL.O) posted the biggest annual advance among NYSE FANG+ constituents, enjoying its best year since 2009.

Dow Transports (.DJT), considered by many a barometer of economic health, registered a yearly gain of more than 31%.

Steadily rising Treasury yields - along with a recent hawkish shift from the Federal Reserve, which now foresees as many as three rate hikes in the coming year - have supported interest rate-sensitive financials (.SPSY) which gained nearly 33%.

• Americans borrowed record $1.61 trillion to buy homes in 2021

Mortgage lenders issued $1.61 trillion in purchase loans in 2021, up from $1.48 trillion in loans issued in 2020 and marking the highest mortgage borrowing numbers ever recorded.

The 2021 figures exceeded a previous record set in 2005, when $1.51 trillion in loans were issued, according to The Wall Street Journal.

The record-setting numbers reflect a red-hot housing market. At the beginning of the pandemic, people were drawn to the market with low interest rates and desire to have more space at home — desires that continue to drive up house prices, the Journal noted.

Home prices went up by 18.4 percent in October, marking a slight drop from when home prices were up by 19.1 percent in September.

But with a strong labor market, Americans who have obtained pay raises or saved during the pandemic are potentially prepared to step into the housing market despite the soaring costs.

The Bureau of Labor Statistics reported that wages for all private-sector workers increased by 4.6 percent year over year in the third quarter, the Journal noted.

“All of that extra income goes somewhere, and a lot of it went into housing,” Taylor Marr, deputy chief economist at Redfin Corp., a real-estate brokerage, told the newspaper.

Stocks kicked 2022 off at record highs

For the Dow (INDU), that means at all-time highs.

The index finished up 0.7%, or nearly 250 points, on Monday, logging a new record high on the first trading day of 2022.

Similarly, the S&P 500 (SPX), the broadest measure of Wall Street, closed at a record, up 0.6%.

Dow Jones Industrial Average books 2nd record close of 2022

The Dow closed up about 215 points, or 0.6%, to finish at 36,799 and carved out an intraday record high at 36,934.84.

In corporate stocks, shares of Ford Motor Co. F, +11.67% jumped over 11%, hitting a 21-year high, after the auto maker said it plans to nearly double production of its all-electric F-150 Lightning pickups at its Dearborn, Mich., facility to 150,000 trucks a year to meet “soaring customer demand.”

US unemployment sinks to 3.9% as many more people find jobs

The nation’s unemployment rate fell in December to a healthy 3.9% — a pandemic low — even as employers added a modest 199,000 jobs, evidence that they are struggling to fill jobs with many Americans reluctant to return to the workforce.

The drop in the jobless rate, from 4.2% in November, indicated that many more people found work last month. Indeed, despite the slight hiring gain reported by businesses, 651,000 more workers said they were employed in December compared with November.

For now, steady hiring is being driven by strong consumer demand that has remained resilient despite chronic supply shortages. Consumer spending and business purchases of equipment are likely propelling the economy to a robust annual growth rate of roughly 7% in the final three months of 2021. Americans’ confidence in the economy rose slightly in December, according to the Conference Board, suggesting that spending was probably healthy for much of last month.

Wages also rose sharply in December, with average hourly pay jumping 4.7% compared with a year ago. That pay increase is a sign that companies are competing fiercely to fill their open jobs. A record-high wave of quitting, as many workers seek better jobs, is helping fuel pay raises.

• January's jobs stunner

After days of doom-and-gloom talk about how bad the January jobs numbers would be due to the Omicron variant, they turned out to be, um, great?

• Employers added 467,000 jobs last month, despite millions out sick.

Why it matters: It's rare for any jobs numbers to be stunning, but these were. They leave little doubt that this remains a tight job market in which employers are doing everything they can to hold on to their workers.

The big picture: Some of the biggest job gains were in categories that have strong seasonal patterns, normally adding workers in the fall and then cutting those temporary workers in January.

• But employers, desperate for staff, appear to have held onto those workers in greater numbers than in a normal year.
• Due to the statistical process of seasonal adjustment, "cutting fewer workers than usual for this time of year" gets translated into "adding lots of jobs."

By the numbers: Leisure and hospitality added 151,000 jobs; retail added 61,000; and transportation and warehousing added 54,000.

Between the lines: The report offered more evidence that this is an exceptionally tight labor market, with inflationary pressures brewing, giving the Federal Reserve the green light for interest rate increases.

• Average hourly earnings rose a robust 0.7%, and are up 5.7% over the last year. Employers are being forced to pay up to fill their job openings.

Yes, but: Omicron really did have an effect. The report said 6 million people were unable to work because their employers were closed or lost business due to the pandemic, up from 3.1 million in December.

What they're saying: "Had the prior relationship between Covid cases and employment held true, 800k daily new Covid cases would have led to 2.3 million job losses," Julia Pollak, chief economist at ZipRecuiter, tweeted. "Instead, we saw 467,000 job GAINS!"

The bottom line: This is an incredibly strong labor market that is poised to strengthen further as Omicron fades.

• Comments on January Employment Report

This was a strong report, and the revisions show job growth was stronger - and steadier - over the last year than originally reported.

The headline jobs number in the January employment report was well above expectations, and employment for the previous two months was revised up by 709,000. The participation rate and the employment-population ratio both increased, however the unemployment rate increased to 4.0%.

Leisure and hospitality gained 151 thousand jobs in January. In March and April of 2020, leisure and hospitality lost 8.20 million jobs, and are now down 1.75 million jobs since February 2020. So, leisure and hospitality has now added back about 79% all of the jobs lost in March and April 2020. https://www.calculatedriskblog.com/2...nt-report.html

• Remarks by President Biden on the January Jobs Report

Hey, folks. Good morning. It’s still morning by about 10 minutes. (Laughter.) I want to speak to you this morning about the extraordinary resilience and grit of the American people and American capitalism.

Our country is taking everything that COVID has to throw at us, and we’ve come back stronger.

I’m pleased to report this morning what many of you already know: that America’s job machine is going stronger than ever, fueling a strong recovery and opportunity for hardworking women and men all across this great country.

America is back to work.

Today we learned that in January, our economy created 467,000 jobs. But that’s not all. We learned that job growth in November and December over last year was revised up by more than 700,000 jobs. On top of that, 400,000 jobs are previously — on top of the 400,000 that were previously reported.

This morning’s report caps off my first year as President. And over that period, our economy created 6.6 million jobs — 6.6 million jobs.

If you can’t remember another year when so many people went to work in this country, there’s a reason: It never happened.

More: https://www.whitehouse.gov/briefing-...y-jobs-report/

From the 2020 base?

^

US sees decline in unemployment benefit claims for third week in a row

In the week ending February 5, the advance figure for seasonally adjusted initial claims was 223,000, a decrease of 16,000 from the previous week's revised level.

The four-week average for claims, which compensates for weekly volatility, declined by 2,000 to 253,250 after rising for five straight weeks as the omicron variant of the coronavirus spread, disrupting business in many parts of the US.

In total, 1.6 million Americans were collecting jobless aid the week that ended Jan. 29, essentially flat from the previous week.

Even as omicron variant spread quickly earlier this winter, employers have been eager to hire, a sign of a resilient economy.

That winter spike in infections briefly tripped up the country's strong recovery from 2020's virus-caused recession, but employers appear confident in long-term growth. US sees decline in unemployment benefit claims for third week in a row - Calculated Risk: Weekly Initial Unemployment Claims Decrease to 223,000 - Please Wait... | Cloudflare

US Retail Sales Hit Record High, Highlighting Economy’s Underlying Strength

Retail sales surged 3.8 percent last month, the largest rise since last March. That raised sales to their highest level since the government started tracking the series in 1992.

The broad increase in sales was led by motor vehicles.

Auto sales typically fall in January after the holiday promotional season. Given the ongoing scarcity of motor vehicles because of a global shortage of semiconductors, the drop last month was probably smaller than had been expected by the seasonal factors, the model used by the government to iron out seasonal fluctuations in data.

That likely resulted in the seasonal factors being more generous than in previous years. Unadjusted auto sales last month were the highest for the month of January going back to 1992.

Retail sales last month were also lifted by higher prices because of shortages amid strained supply chains. They are mostly made up of goods and are not adjusted for inflation.

Economists estimated that retail sales rose about 2.8 percent in January when adjusted for inflation, which put them back in line with their pre-pandemic trend.

Receipts at auto dealerships snapped back 5.7 percent after dropping 1.6 percent in December. Sales at electronics and appliance stores increased 1.9 percent. Building materials stores sales surged 4.1 percent. There were also gains in receipts at food and beverage stores as well as clothing retailers.

U.S. Retail Sales Rise Most in 10 Months in Broad-Based Rebound - January retail sales trounce expectations - https://www.census.gov/retail/marts/...ts_current.pdf

• January Housing Starts: Most Housing Units Under Construction Since 1973

Blue is for 2+ units. Currently there are 758 thousand multi-family units under construction. This is the highest level since July 1974!

• Weekly US jobless claims up, but remain historically low

Applications for U.S. unemployment benefits rose last week but remain near historically low levels, reflecting relatively few layoffs across the economy.

Jobless claims rose by 23,000 to 248,000 for the week ending Feb. 12, the Labor Department reported Thursday. Claims were revised upward to 225,000 the previous week.

Yet the four-week average for claims, which compensates for weekly volatility, fell by 10,500 to 243,250. It was the second straight week of declines after rising for five straight weeks as the omicron variant of the coronavirus spread, disrupting business in many parts of the U.S.

In total, fewer than 1.6 million Americans were collecting jobless aid the week that ended Feb. 5, a decrease of about 26,000 from the previous week.

First-time applications for jobless aid generally track the pace of layoffs, which are back down to fairly healthy pre-pandemic levels.

Earlier this month, the Labor Department reported a surprising burst of hiring in January, with employers adding 467,000 jobs. It also revised upward its estimate for job gains in November and December by a combined 709,000. The unemployment rate edged up to a still-low 4% from 3.9%, as more people began looking for work, but not all of them securing jobs right away.

Even as omicron variant spread quickly earlier this winter, employers have been eager to hire. That winter spike in infections briefly tripped up the country’s strong recovery from 2020′s virus-caused recession, but employers appear confident in long-term growth.

Massive government spending and the vaccine rollout jumpstarted the economy as employers added a record 6.4 million jobs last year. The U.S. economy expanded 5.7% in 2021, growing last year at the fastest annual pace since a 7.2% surge in 1984, also coming after a recession.

An overheated U.S. economy has spawned inflation not seen in four decades, leading the Federal Reserve to ease its monetary support for the economy. The Fed has signaled that it would begin a series of interest-rate hikes in March, reversing pandemic-era policies that have fueled hiring and growth, but also stubborn inflation.

https://www.dailymail.co.uk/news/art...arts-fall.html - https://abcnews.go.com/Business/wire...month-82953788

• Jobless claims fall to lowest level since 1970

New claims for unemployment insurance fell last week to their lowest point in 52 years, according to data released Thursday by the Labor Department.

In the week ending Feb. 19, initial weekly claims for unemployment aid fell by 17,000 to 232,000, falling from a revised total of 249,000. Claims rose by 24,000 in the week ending Feb. 12, breaking a string of three consecutive declines.

Jobless claims have remained largely near or below pre-pandemic levels since November with U.S. businesses still desperate to fill millions of open jobs. Firms have hesitated to lay off employees amid a record ratio of open jobs to unemployed workers, though claims ticked up slightly as the omicron variant ripped through the U.S.

"Unemployment claims dropped in the most recent week, as expected, as the recent rise was correlated with the Omicron wave. As the wave recedes, so too have layoffs. We are on track to hitting the historical average in the next few weeks,” said Robert Frick, corporate economist at Navy Federal Credit Union, in a Tuesday statement.

Despite the blow of omicron and rising inflation, the U.S. job market has held strong since the end of 2021. The U.S. added an average of 541,000 each month since November and saw the unemployment rate hold even at 4 percent in January, just 0.5 percentage points above pre-pandemic levels.

• Q4 GDP revised up to 7%

A separate report showed that gross domestic product, a sum of all the goods and services produced in the U.S. economy, increased at a 7% annualized rate during the fourth quarter, according to the Commerce Department.

On the broader economic side, the slight upward revision of GDP from the initial reading of 6.9% was in line with market estimates. That brought full-year growth to 5.7%, the fastest pace since 1984 that was driven by a strong inventory rebuild in the second half of the year. https://www.bea.gov/sites/default/fi...dp4q21_2nd.pdf

• Banner 2021 for Stocks Boosts Gains for 401(k) Savers

Wall Street’s blockbuster gains in 2021 helped pad savers' retirement accounts, lifting the average balance on some popular investment plans to new highs.

The average 401(k) plan balance stood at $130,700 at the end of last year, up 7.6% from 2020, according to Fidelity Investments. The median balance, a better measure of the typical plan size, rose 2.1% to $28,600. The figures are based on a review of 20.4 million Fidelity accounts. Only about 60 million Americans actively participated in 401(k) plans at the end of the third quarter last year, according to the Investment Company Institute, an association representing investment funds.

The average balance for individual retirement accounts on Fidelity's platform also climbed to a record-high $135,600 as of the fourth quarter of 2021, up 5.9% from a year earlier.

Retirement plan gains came as cheap money thanks to historically low interest rates combined with strong consumer demand and corporate earnings growth to keep investors in a buying mood.

The S&P 500 scored its third-best performance in the last decade in 2021, rising 26.9%, for a total return of 28.7%, including dividends.

Why the big gap in gains between the S&P 500 and the average 401(k) or IRA? Because those plans typically hold a variety of asset classes, including foreign stocks, bonds and cash, for example, while the S&P 500 is comprised only of U.S.-based stocks.

Investors who had been pumping money into their Fidelity 401(k) plans for at least 10 years averaged a balance of $413,600 at the end of the the fourth quarter, the company said.

We're back to making more money, that's worth less.

Dow surges nearly 800 points and aims for best day in over a year

Dow logs best day in over a year to end volatile week as angst over Russia’s Ukraine invasion gives way to buying

How did stock indexes perform?

• The Dow Jones Industrial Average DJIA, +2.51% surged 834.92 points, or 2.5%, to close at 34,058.75, with the blue-chip gauge notching its best daily gain since early November 2020.
• The S&P 500 SPX, +2.24% rose 95.95 points, or 2.2%, to end at 4,384.65.
• The Nasdaq Composite Index COMP, +1.64% added 221.04 points, or 1.6%, to finish at 13,694.62.
• For the week, the Dow dipped by less than 0.1% while the S&P 500 rose 0.8% and Nasdaq Composite climbed 1.1%.

...and the Dow (and S&P 500) could just as easily fall by the same amount (or worse) during these days of war, pestilence, inflation and supply chain disruption...I always follow the old stock market maxim: invest when there's blood in the streets...

Latest estimate: 0.0 percent — March 1, 2022

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2022 is 0.0 percent on March 1, down from 0.6 percent on February 25.

After recent data releases from the US Census Bureau and the Institute for Supply Management, an increase in the nowcast in first-quarter real personal consumption expenditures growth from 1.6 percent to 2.3 percent was more than offset by a decline in the nowcast of the contribution of net exports to first-quarter real GDP growth from -0.10 percentage points to -0.94 percentage points.


The next GDPNow update is Tuesday, March 8. Please see the "Release Dates" tab below for a list of upcoming releases.






GDPNow -
Federal Reserve Bank of Atlanta