Thursday's Scoop: Electric☀️

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Here’s what you need to know today…

1. Americans keep getting more productive but aren’t getting paid for it.

2. Layoffs are picking up.

3. US manufacturing is still struggling.

S&P 500: 4,906.19
1Mo: +3% | 1Yr: +17% | 5Yr: +81%

The market bounced back from the Wednesday slump brought on by policymakers delaying expected interest rate cuts. With Meta, Amazon, and Apple reporting massive growth, Big Tech keeps boosting the market.

American workers have been working longer hours and more productively, but their pay isn’t keeping up. The Labor Department reported nonfarm business sector labor productivity increased at a 3.2% rate in the last three months of the year, far more productive than expected. Output increased 3.7%, and hours worked increased 0.4%. Inflation-adjusted wages rose only 1.8% over the past year.

Layoffs keep picking up. This week, more announcements hit the headlines, heavily concentrated in the tech sector, including Zoom and Okta. The Labor Department reported initial unemployment claims rose last week to 224,000, the highest level in months but still reasonably low. A separate report from global outplacement firm Challenger, Gray & Christmas revealed a 136% jump in layoff announcements in January from December, but the total is still 20% lower than last January.

The manufacturing sector is still struggling. The Institute for Supply Management (ISM) reported the 15th straight month of contracting business activity in manufacturing. This has been the most prolonged downturn in the sector in over 20 years. Factory orders rebounded in January, but goods prices jumped, raising concerns about inflation.

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What are dividends and buybacks?

Companies with extra cash can reward shareholders for their support in two ways. First, they can distribute money directly out to investors, literally giving them a share of the profits by paying them a dividend. Companies will declare that every investor gets $X for each share they own.

Second, companies can buy back their own shares from public investors. Buybacks allow companies to reduce the number of outstanding shares in the market, making each remaining share more valuable. They're slicing their company ownership into fewer pieces, allowing each shareholder to own a greater percentage of the company. If companies pause or slow either of these activities, it can mean they're preparing for trouble.