The jobless claims report for the recent reporting week tempered some of the euphoria set in motion by the better-than-expected January non-farm payrolls data released on Wednesday. Equity futures (ES) fell sharply, bond prices rose, recovering from Wednesday’s slide, and the dollar edged higher.
Claims Mixed: Jobless claims for the week ended Feb. 7 fell 5,000 to 227,000, according to a report released by the Bureau of Labor Statistics (BLS). Economists expected a steeper drop to 222,000 from the initially reported 232,000 for the previous week. The four-week average, which smooths out the volatility, climbed 7,000 to 219,500.
Source: BLS
Continuing claims, which measures the number of people already receiving unemployment benefits who have filed for ongoing weekly assistance, jumped 21,000 to 1.862 million in the week ended Jan.31. This was more than the consensus estimate of 1.850 million. But the four-week average for continuing claims fell 3,250 to 1.847 million, marking the lowest level since Oct. 5, 2024.
Takeaway for traders: The labor market is still tight, but traders used the data as an excuse to take profit from the post-NFP risk rally. The ES sell-off has taken the derivative instrument below its 50-day simple moving average (SMA), currently at 6,926. If the weakness continues, the next stock could be at the 100-day SMA, at 6,844.
If ES holds key support at its 100-day SMA, one can go for a quick short-term trade to capture a small move higher, else it could be bought at the next demand zone.
Source: TradingView
The dollar futures have been rangebound and could move higher if the gap-down from late January is backfilled.
