Initial Jobless Claims came in 4K above expectations at 229K on a seasonally adjusted basis; up from last week’s 223K.  This is near the upper end of the range jobless claims have been in for the past few months.  It has also now been two months since claims last hit a new low of 200K.  On the other hand, this week marks the 210th week that claims have come in below 300K.  So while perhaps the strength of the labor market could be taking a breather, by all means, it still appears healthy.

For the third week in a row, the four-week moving average of the seasonally adjusted data has declined; falling to 223.75K from 226.25K last week.  It has also now been three weeks since claims last hit a 52-week high.  Though more 52-week highs are certainly not out of the realm of possibilities in the near future, this improvement seems to point to these highs from the beginning of February being more consistent with random spikes that have been observed in the past rather than a new trend.  An additional note now looking back at February jobs data as a whole, with all of the data for the month in—namely last week’s abysmal Nonfarm Payrolls report showing only a gain of 20K—the labor market has seemed to calm down in the tail end of the month, and conditions seem to have improved slightly from the rough first couple of weeks in February.

On a non-seasonally adjusted basis, claims fell this week consistent with seasonal tendencies.  Declining 11.8K to 208.8K this week, the non-seasonally adjusted number came in far below the average of 325.9K for the current week of the year since 2000.  Also while it is near cycle lows, the same week last year actually saw a lower number of 204.9K.  Since the start of the year, there already has been five times that the non-seasonally adjusted claims number has come in worse than the prior year.  That compares to only twice that it had happened in 2018 and seven times in 2017.  So while still very healthy, going forward labor markets are certainly showing signs of losing momentum.

To say it has been a tough couple of days for anyone connected to Boeing (BA) would be an understatement.  In terms of the company’s stock, the last two days have seen the first back to back declines of 5%+ in close to a decade (June 2009).  As a result of this week’s decline, BA has lost its perch at the top of the DJIA in terms of best performers YTD, now coming in at number six.  That being said, the stock is still up over 17% on the year, and because of the DJIA’s unique way of weighting components by their share price rather than market cap, BA has still been the largest contributor to the DJIA’s YTD gains. Even more amazing? It’s still not even close.

The chart below shows the YTD attribution of each of the DJIA’s 30 components to the index’s total gain YTD.  Accounting for still more than 15% of the DJIA’s YTD gain, BA has had nearly twice the YTD impact on the DJIA so far this year as the next closest stock (Goldman Sachs – +8.7%).  The fact that BA still has had such an outsized impact on the DJIA even after its big decline this week shows not only how extreme its move higher to kick off the year was, but also how odd it is to weight a stock index by an arbitrary measure like each component’s share price.  One final note — it was somewhat ironic to see that the one stock that has had the most negative impact on the DJIA YTD is also the index’s newest component: Walgreen’s Boots Alliance (WBA) added last June.

Coming off of declines last week, equities have performed much better in the first half of this week.  Currently, half of the major index ETFs have erased last week’s losses and moved back into overbought territory.  Meanwhile, the other half which is predominantly small and mid-caps, in addition to the Dow thanks to Boeing, are still in the red.  This half remains in neutral territory whereas most had been overbought this time last week.  Despite some of these ETFs having managed to recoup losses from the past week, small and mid-caps still have a little ways to go until they do the same.  Each of these are still down over 1% with the Core S&P Small Cap (IJR) down the most at 1.69%.  Even with this recent pullback, small and mid-caps remain some of the best performing indices so far in 2019.

Taking a look by sector, it is just about the same story.  Of the eleven sectors, six are now overbought while the remaining five are neutral.  In the same way that those with a loss over the past week are still neutral, the others that have edged out gains have pushed deeper into overbought territory.  As we mentioned in last night’s Closer, the Utilities sector is of particular interest.  The sector’s Water, Multi, and Electric industries are the closest to their respective 52-week highs.  Utilities is currently the most overbought approaching extreme levels (2 standard deviations or more above the 50-DMA).  Over the past week it has gained the most at 2.1%, while on a YTD basis, the sector’s gains have been more middling.  Conversely,  the weakness in the Health Care sector ETF should be addressed as it is up only 5.28%; far worse than its peers.