US stocks are mixed, with the Nasdaq outperforming as investors abandon energy and materials and rush back into the FAANG stocks. Expectations are high that big tech will be the bright spot this earnings season and demand is strong for most of the mega-cap tech stocks.
Day two for the Biden administration delivered no surprises and with the focus shifting to the debate over his USD1.9 trillion COVID relief plan. The next couple of weeks will be filled with political posturing but expectations are high that at least USD1 trillion worth of support will get approved.
Philly Fed business outlook jumps
A wrath of US data saw investors focus on a robust Philly Fed business outlook. The Philadelphia-Delaware-New Jersey manufacturing index jumped to the highest level since early in the pandemic. Incoming stimulus, satisfaction that the election is over, and light at the end of COVID tunnel sent the headline index to 26.5, well above analysts’ expectations of 11.8 and the prior reading of 11.1.
Jobless claims came in better-than-expected but still remain elevated. 900,000 Americans filed for unemployment, a small improvement from the prior week, but still over 4X what we would see before the pandemic. A bright spot in the weekly US department of labor report was that the total number of Americans filing for benefits improved by 2.27 million to just under 16 million.
The housing market continues to wow! US housing starts rose more than all estimates to the highest level since the end of 2006. The outlook for future housing projects remains upbeat as permits rose 4.5%, also the fastest pace since 2006. The housing market is still on fire and even as we near the other side of COVID, it shows no signs of cooling down.
Euro rallies on ECB
The euro rallied following an upbeat ECB Chief Lagarde that focused on COVID vaccines and the Brexit deal, highlighting that downside risks are less pronounced. Lagarde noted that the ECB does not need to spend all of the remaining 1 trillion euros left in the Pandemic Emergency Purchase Program (PEPP). After the ECB meeting, officials announced a review by March to measure the impact of their current programs’ impact on financial conditions.