What’s the Story Morning Glory?

by CC January 19, 2012 9:31 am • Commentary


New applications for U.S. unemployment benefits fell sharply last week, putting them at their lowest level in almost four years, government data showed.

Yet at least part of the plunge stems from seasonal quirks that might prove temporary, making it harder to gauge the underlying trend in claims and determine whether layoffs will continue to decline.

Jobless claims sank by 50,000 to a seasonally adjusted 352,000 in the week ended Jan 14, the U.S. Labor Department said Thursday. It’s the lowest level since April 2008.

Economists surveyed by MarketWatch had estimated claims would decline to a seasonally adjusted 375,000 from 402,000 in the prior week. Claims from two weeks ago were revised up by 3,000.


In other news, consumer prices were unchanged last month, showing pressures on inflation may be easing. Declining energy costs were offset by increases in food and other items. Core prices, which exclude those two, rose only 0.1%.

And housing starts dropped 4.1% in December, worse than economists were expecting. The housing market has seen a bit of optimism in recent months, but today’s reading further indicates that the recovery for this beleagured industry will continue to be bumpy.

US stock futures were creeping higher prior to the data and maintained those gains after the releases. DJIA futures up 52, S&P 500 futures up 7.

UPDATE: BTIG’s Dan Greenhaus chimes in today’s data. His big takeaway is the claims data tend to showcase the pace of firing, while the monthly jobs report highlights the pace of hiring. So today’s report may indicate that firing is occurring less and less, but that doesn’t necessarily translate to more hiring.

From Greenhaus:

We do not believe that the pace of hiring will be sufficient to reduce the unemployment rate in a particularly rapid fashion but unemployment rate reductions at any speed is better than nothing.  At some point in coming months, uncertainty related to Europe and Asia may begin to weigh on U.S. growth which in turn may affect hiring plans, but for now, the improvement in the U.S. economy is reflected in a host of data points including today’s jobless claims number.


Bank of America swung to the black in the fourth quarter as the bank took a lighter hit from mortgage-related issues and gained from its push to sell assets. Shares were up 5.9% to $7.20 in recent premarket trading as revenue exceeded analyst expectations.

Morgan Stanley swung to a fourth-quarter loss as the bank booked a hefty loss related to the settlement of a long-running legal clash and weaker performance in its institutional-securities business. Shares climbed 4.9% to $18.20 premarket as the results still came in ahead of analysts’ expectations.

Johnson Controls’ fiscal first-quarter earnings rose 9.3% on continued strength in the battery maker’s automotive unit, though the company lowered its full-year guidance amid a temporary plant shutdown in China. Shares were down 4.6% at $33.95 premarket.

Knight Capital Group Inc.’s fourth-quarter earnings surged as the company’s market making business continued to post sharply higher earnings amid a jump in trading activity. Shares jumped 6.2% to $12.58 premarket as the results easily topped Wall Street estimates.

UnitedHealth Group Inc.’s fourth-quarter profit rose a stronger-than-expected 21% as the health insurer booked a large jump in revenue at its Optum business and increased enrollments. Shares climbed 0.6% to $54.27 in recent premarket trading.

F5 Networks Inc.’s fiscal first-quarter earnings rose 19% as the Internet traffic service provider reported year-over-year sales gains. Shares rose 8.8% to $118 in premarket trading since the results topped the company’s expectations and it issued an upbeat forecast for the current quarter.

EBay Inc.’s fourth-quarter adjusted earnings rose 15% to beat its generally conservative guidance, as the e-commerce operator reported an increasingly common pattern of its payments unit leading growth amid a solid performance in its marketplace division. The company provided mixed guidance for results in the new year. Shares climbed 3.7% to $31.45 premarket.

Xilinx Inc.’s fiscal third-quarter profit fell 17% on weaker revenue from the chip maker’s communications customers, though its earnings per share topped analysts’ estimates. Shares rose 5.2% to $37.13 premarket as the company predicted its fourth-quarter revenue would rebound.

Nokia Corp. will cut the price of its new Lumia 710 smartphone in the U.K. following pressure from U.K. mobile operators who are seeking to stimulate consumer interest in the device, a person familiar with the situation said Thursday. Shares fell 1.4% to $5.59 in recent premarket trading.

BlackRock Inc.’s fourth-quarter profit slipped 16% as the world’s largest money manager by assets booked lower investment advisory fees and securities lending revenue. Shares slid 0.9% to $186.05 in light premarket trading.

Billionaire investor Carl Icahn boosted his stake in WebMD Health Corp. to 11.6%, according to a filing Wednesday with the Securities and Exchange Commission. Shares gained 0.5% to $26.43 in recent premarket trading.

Sealy Corp. reported its fiscal fourth-quarter loss widened, with the mattress maker showing weaker sales and margins. Shares dropped 21% to $1.45 premarket as sales sharply missed analyst expectations.