Economy
Weekly claims for unemployment insurance came in higher-than-expected, but some of it was written off as related to the major winter storm that rolled across the country recently. The company Challenger, Gray, and Christmas puts out a monthly jobs report that attempts to compile data from companies on layoffs and hires based on corporate press releases, SEC filings, and other publicly available information. The Challenger report released this week showed the most layoffs for the month of January since 2009. The announced layoffs haven't shown up yet in the official government reports, but this week's tick up in jobless claims is worth noting. We were supposed to get the Bureau of Labor Statistics' monthly jobs report on Friday, but - stop me if you've heard this before - it was delayed due to the government shutdown. We'll now get the January numbers on Wednesday of this coming week.
Markets
The S&P 500 finished down 0.1% for the week, but after the volatility we saw, I think anyone would be happy with that. There was heavy selling in technology stocks, particularly in the software industry as fears of artificial intelligence disruptions ran rampant. Google parent company Alphabet and Amazon both reported earnings this week, but what seemed to lead the headlines for the calls was the amount of spending both companies have planned for the coming year. They are seemingly both all-in on AI spending, committing nearly $400 billion between the two. These eye watering numbers led to negative initial reactions on Wall Street as traders have doubts of them being able to earn a positive return on investment in the near future. There was a massive rally on Friday and most of the week's early losses were recovered. The Dow Jones Industrial Average closed above 50,000 for the first time, a remarkable feat considering it was around 28,000 back in October 2022.
While the market cap-weighted S&P 500 is still under it's high water mark, the equal-weight S&P 500 broke out to new all-time highs this week. It could be a bullish sign for the market that despite the tech sectors recent woes, the rest of the market is on fire right now.
What We're Reading
- Software Stock Swoon Signals Extraordinary Faith in AI- Newcomer (no relation)
- Big Tech's AI Push is Costing More than the Moon Landing- WSJ
Have a great weekend.
Dogwood Wealth Management