Jobless claims rise, mixed housing data, Philly Fed softens, Credit Suisse and Walmart down post earnings

A resumption of the surge in global bond yields is starting to worry some traders.  Despite a firm Fed commitment that monetary policy will remain supportive and additional fiscal spending from the Biden administration, US stocks are ripe for a pullback if yields continue to go up.  Another round of mixed economic data confirms what we know that the economic recovery is unbalanced, and the fragile labor market will warrant further support even after Congress delivers a trillion-dollar COVID relief package.

US data mixed

Weekly jobless claims rose to a four-week high at 861,000, much higher than the consensus estimate of 773,000 and the upwardly revised prior reading of 848,000.  Jobless claims forecasts ranged from 720,000 to 790,000, so this miss exemplifies the fragility of the labor market.  Optimism remains that claims will eventually drop as COVID cases steadily decline and large parts of the economy reopen.

Another round of housing data painted a mixed picture, as Housing Starts disappointed, but Building Permits impressed.  Winter weather and COVID could be impacting the January housing data so investors might still hold onto optimism that softness in home sales will be temporary.

The Philadelphia Fed manufacturing index softened slightly but still suggests manufacturing activity remains healthy.  The ninth straight positive reading at 23.1 was better than the analysts’ forecast of 20.0, but lower than the prior month of 26.1.  The manufacturing recovery is obviously slowing as declines were broad across new orders, prices-received, and six-month outlooks.

Credit Suisse

Credit Suisse delivered a mixed earnings bag.  The net loss for the fourth quarter wasn’t as bad as expected but both fixed income and equities trading missed big time.  Fixed income came in at USD788 million, softer than the analysts’ consensus of USD904.4 million, while equities trading printed atUSD555 million, softer than the USD643.4 million estimate.  The headline net loss was of CHF88 million was better than the consensus estimate of a CHF335 million loss.

Credit Suisse CEO Gottstein also remained optimistic in SPACs, with growing interest in Europe and strong activity in Asia.

Walmart

Walmart shares plummeted after an earnings miss, downbeat outlook, and after the announcement to raise wages for 425,000 workers to above USD15 an hour.  While many Americans will embrace Walmart’s hike in wages and possibly further deliver to brand loyalty, shareholders decided this might be a good time to head for the exits.  Walmart performed well during the pandemic and might become a small victim of the rotation into small caps.

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