Jobless claims disappointed this week as both initial and continuing claims came in above expectations.  In addition to an upward revision of 55K to 848K last week, initial jobless claims were higher at 861K this week.  That brought claims to the highest level since the week of January 15th when they were 14K higher at 875K.  This week also marked the third week in a row without an improvement in jobless claims.

Although the seasonally adjusted number was higher, on an unadjusted basis claims were a bit better.  Only 862.4K claims were filed this week compared to 868.1K the prior week. We would note that seasonality is very much on the side of claims for the current week of the year though.  In the history of the data going back to 1967, there has only been one year, 1978, that the seventh week of the year has seen the unadjusted number move higher week over week.

While unadjusted regular state claims were slightly better, factoring in Pandemic Unemployment Assistance (PUA) claims, the picture once again worsens.  PUA claims saw a significant increase of 174.43K from last week rising to 516.3K.  That is the highest level of PUA claims since the week of September 18th and the biggest one-week increase since mid-May.

On a state level, though, there are some added quirks.  Ohio was the single biggest contributor to that increase in PUA claims as the state reported 232,016 claims (or 44.9% of all national claims) compared to only 10,156 in the prior week.  That’s 2% of the state’s entire population  The next biggest contributor to PUA claims was California with only 38,052 claims.  Even for just regular state claims, Ohio has led the pack with the highest level of claims of any state second to only California.  Over the past two weeks, Ohio has reported regular state claims above 140K. That compares to an average for the state of 49.7K from March through the last week of January.  When looking at these numbers, we would urge some caution taking them purely at face value given news of large-scale fraudulent claims.

As for continuing claims, the same trends are still very much in place.  Seasonally adjusted continuing claims which are lagged one week to initial claims fell for a fifth consecutive week and made another low for the pandemic period. At 4.494 million in the first week of February, regular state continuing claims were at the lowest levels since March 20th.

Factoring in other programs adds an additional weeks’ lag to continuing claims, and here too continuing claims improved.  Total claims across all programs fell from 19.7 million for the week of January 22nd to 18.376 million in the last week of January.  While sequentially better, total continuing claims have still hit a bit of a plateau for the time being.  Additionally, extension programs like Extended Benefits and Pandemic Emergency Unemployment Compensation (PEUC) saw some of their most significant declines since the start of the pandemic; to a degree reversing what has been a trend of a growing prevalence of these types of claims.  PEUC continuing claims fell by 718K on a week over week basis which was the second-largest drop behind the drop of over 1 million at the end of 2020 due to the expiration of benefits before being renewed shortly after.  For the Extended Benefits program, the 196.9K decline was the biggest single-week decline of the pandemic.Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

The S&P 500 has been reversing from its record highs over the past couple of sessions, but on an individual stock basis there are still a large number of names that have reached new 52-week highs.  As shown in the charts from our Daily Sector Snapshot below, through yesterday’s close, a net percentage of just over 15% of the S&P 500 reached new 52-week highs. That is the strongest reading in new highs since January 12th. Outside of several days at the start of 2021, the only other days of the pandemic era with as high if not higher readings were September 2nd, October 9th, and November 9th. Most of the sectors are also seeing their number of new highs rise to strong levels.  In addition to the S&P 500, yesterday’s reading for Communication Services, Financials, Materials, and Tech all were in the top decile of all days since at least 1990. In the case of Materials, while new highs have been trending higher and yesterday’s reading was historically strong, it was still well off the record highs from earlier this year.

On the other hand, perhaps the most impressive sector in terms of net new highs has been Technology.  Yesterday, 35.53% of the sector’s stocks reached a new 52-week high.  Not only is that the highest reading with respect to the other sectors, but that high reading also stands in the top 0.5% of all days for the sector since at least 1990. In other words, there have only been 38 other days since 1990 that the Tech sector saw as strong of a reading in net new highs as yesterday. The most recent of those was November 9th when 43.84% of the sector touched a new 52-week high. Overall, in the context of more broadly positive breadth with strong readings in new highs for other sectors, Tech’s large number of new highs is an added plus for the broader market given the massive 28.08% weight of the sector.  Try Bespoke Premium to receive these charts on a daily basis in our Sector Snapshot report.

The housing sector remains on fire and as such, homebuilder sentiment remains historically elevated. After falling for the past two months, the NAHB’s Housing Market Index experienced a small bounce in February. The index rose from 83 to 84 compared to expectations of no change.  At 84, it is still 6 points below the November record high of 90, but that is also above any other reading in the history of the data prior to October.

The improvement in the headline number this month was driven entirely by higher traffic. That index was up 4 points month over month and now sits 5 points below November’s record high of 77.  Meanwhile, of the other components, Present Sales went unchanged at 90 while optimism for the future was dented with that index dropping to a six-month low of 80.  Again, although those readings have not improved, they remain historically strong.

As with the different categories of the report, the readings across the various regions’ indices were mixed.  The West was the only region where homebuilder sentiment declined. Granted, that drop was only 1 point and at 91, the index still ties the pre-pandemic record high. Meanwhile, the South went unchanged and the Midwest experienced a small rebound.

One of the more notable changes of the whole report was sentiment in the Northeast. Even though it too has been at some of the strongest levels on record, over the past few months the region’s reading on homebuilder sentiment has been a significant laggard compared to the rest of the nation.  From its high of 87 in October, the index for the Northeast fell 19 points through January.  For comparison, in that same span, the Midwest index fell only 4 points while the South and West were up 1 and 3 points, respectively.  In February, though, whereas other regions remain several points off their highs, the Northeast put in a new record high after lurching 21 points higher.  The only times that this index has risen by more in a single month was in June (31 points) and July (22 points) of last year.

As for other housing data released this morning, the MBA’s weekly reading on mortgage purchase applications has continued to fall. Since the peak in mid-January, mortgage purchase applications have fallen nearly 14%, and the index now sits at the lowest level since the first week of November.  Granted, that is still well above pre-pandemic levels, so it’s hardly a weak reading.

Higher mortgage rates likely in part played a role in that lower reading in mortgage applications. As shown below, with a broader rise in rates recently, the national average for a 30 year fixed rate mortgage has gone from a low of 2.82% just over a week ago to 2.94% yesterday; tied with January 12th for the highest rate since the end of November. That has also been the biggest one-week rise in the average mortgage rate since August.

Like the macro data released today, homebuilder stocks are in turn off their highs.  After reaching extreme overbought levels last week at the top of its uptrend channel that has been in place over the past few months, the S&P Homebuilders ETF (XHB) has been mean-reverting over the past couple of days.  With the downward move, the 50-DMA will be a support area to watch as it consistently has been since the summer. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.