Today's Scoop:

Hey friends, almost Friday! Here's what you need to know today...

1. New home construction has stalled amidst high mortgage rates.

2. US manufacturing is losing steam.

3. Layoffs are still low, despite the cuts from big tech companies.

S&P 500: 3,898.851Mo: +2% | 1Yr: -13% | 5Yr: +36%

The market sank lower today amidst concerning economic data and not-so-great corporate financial reports.

Layoffs are still low despite the cuts from big tech firms like Microsoft and Amazon. The Labor Department reported initial unemployment claims dropped for the third straight week to 190,000 last week. 

US manufacturing is slowing significantly, a sign of a weaker economy. Reports from the New York and Philadelphia Federal Reserve this week pointed to steep declines in manufacturing activity near levels not seen since May 2020.

High mortgage rates have deterred home builders. The Commerce Department reported housing starts dropped 1.4% last month. The number of single-family homes built last year dropped 11% from 2021, the steepest falloff since the Great Recession. This trend could exacerbate the limited supply of homes on the market.

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Inflation & Corporate Profits

The stock market works in anticipation of what's going to happen. Investors choose to own or not own a piece of a company to earn a share of its future growth and profits. Investors often sell stocks when worried about inflation because it can negatively affect corporate profits.

As the costs of materials, labor, and other supplies increase, corporations can pass those higher costs on to the consumer by raising the price of their goods or services. Eventually, the consumer can't handle the price increases and stops buying as much. Corporate profits start to decline as costs keep increasing, but sales slow. We're starting to hit that point now. Investors are watching to see how much higher pricing consumers can bear because the stock market follows the growth of corporate profits.