As was expected this week, jobless claims data deteriorated with seasonally adjusted claims rising to 220K from 216K. However, that was better than expectations which were calling for claims to rise by another 5K up to 225K.  As shown below, claims continue to sit at the low end of the past several months range, indicating a still healthy labor market.

At the moment, claims prior to seasonal adjustment are at an interesting point of the year.  Unadjusted claims totaled 174.5K this week.  That is only a couple thousand claims higher than last year and near the slightly lower readings from 2018 and 2019. Overall, those remain some of the strongest readings on record when comparing the like weeks of the year.  Additionally, we would note that claims are likely at or near their seasonal low. Historically, the current week of the year has been the annual low a quarter of the time (that being the case in 2018 and 2019) whereas the following week has marked the low another 35.7% of the time.  In other words, as we have frequently mentioned in recent weeks, seasonal tailwinds will begin to shift to headwinds in the coming weeks.

Seasonally adjusted continuing claims likewise came in below expectations this week, rising to 1.688 million compared to forecasts of 1.69 million.  Again like initial claims, continuing claims are far from worrisome as they sit at historically strong levels, however, the past few months downtrend in claims has begun to bottom out as it has been eight weeks since the last near term low.

The S&P 500 has managed to rise 1.15% in the past week, but sentiment has barely reflected the positive tone.  After climbing to 42.2% last week, AAII bullish sentiment dropped right back down to 34.4% this week.  That is the largest one week drop in a month although it doesn’t leave bullish sentiment at any sort of new low.

The bulls didn’t move to the bearish camp, however.  In fact, bearish sentiment fell to 29.2%, which is the lowest reading since the week of August 10.

Because the declines in bullish sentiment outpaced the drop in bears, the spread between the two dropped to +5.2.

Given both bulls and bears dropped, neutral sentiment picked up the difference.  As shown below, neutral sentiment rose to 36.4% this week, which was the highest reading since the week of May 18th when it was slightly higher at 37.4%.

While the AAII sentiment survey did not see any sort of particularly noteworthy moves this week, the equity put/call ratio did notch a new high yesterday.  As shown below, over the past couple of months, the ratio has begun to turn higher with yesterday seeing the highest reading since March 10th.  At 1.35, that ratio also measures in the top 1% of all readings since 1995.  Remember, a reading above 1 means there are more put buyers (negative bets) than call buyers (positive bets).

The S&P 500 managed to rise 0.12% on Wednesday in the wake of the CPI release.  That is the fifth month in a row in which the S&P 500 rose in response to a CPI print, and only two months over the past year (February and April) have seen negative reactions.  Although the S&P has consistently risen on CPI days, the size of the moves have been less substantial than they were previously. As shown below, taking a rolling 10-day average of the S&P 500’s daily change on days that CPI is published shows the average performance remains positive but has turned lower versus a couple months ago when the average move was above 1.2%, which was some of the strongest reactions in a decade and a half.

Although S&P 500 performance has been positive on the day of CPI releases over the last year, looking one week out, the results have been less positive.  As shown below, the S&P has consistently fallen in the week after CPI releases. Again taking a rolling 10-day average, one week performance has been negative for 20 months in a row, or every month since the start of 2022.