Initial jobless claims, at a much lower-than-expected 187,000 in the January 13, point to greater strength for the labor market and to another month of strong payroll growth for the monthly employment report. Claims are now at their lowest level since September 2022. Pointing to greater strength for the construction sector are housing starts and housing permits which, boosted by lower mortgage rates, are entering the new year with momentum.

The day's data also included a steady Philadelphia Fed manufacturing report which remained weak but not nearly so weak as Tuesday's great collapse in the Empire State report. Still, manufacturing in contrast to employment and housing appears to be a drag on the overall economy. The day's results leave the US's Relative Performance Index at 20 to indicate once again that recent data on net are coming in safely over consensus forecasts. The longer this trend continues, the less urgency the Federal Reserve will feel to cut interest rates.

Treasury yields have been climbing in reaction to the strong run of numbers, up another 5 basis points to 4.14 percent for the 10-year which is now at its highest level in a month. Yet stocks, which slipped the last two sessions, posted gains on Thursday with the Dow up 0.6 percent and the Nasdaq gaining 1.3 percent on general strength for chip stocks. Nevertheless, specific company news was mostly downbeat: Discover and KeyCorp from the financial sector posted losses on disappointing results, down 10.8 percent and 4.7 percent respectively; heatlh insurer Humana, down 8.0 percent, warned that medicare costs are rising sharply.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.