Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com MARCH OF THE DATA SOLDIERS: A PARADE BACK TO ECONOMIC NORMALTOWN (1115 EST/1615 GMT) A platoon of indicators treated investors to a data parade on Thursday, the sum of which indicated that despite ongoing supply constraints, a tight labor market and persistent inflation, the economy is marching back to "normal." The number of U.S. workers filing first-time applications for unemployment benefits (USJOB=ECI) edged up last week to 206,000, a 9.6% increase from the previous week"s upwardly-revised 188,000. read more Analysts expected the Labor Department to deliver an even 200,000. Despite the increase, initial jobless claims remain at the lower edge of the range typically associated with healthy labor market churn, and provides further evidence of a tightening labor market. With quit rates at record highs and business surveys nearly unanimously lamenting the ongoing worker shortage, employers appear disinclined to hand out pink slips. "While seasonal factors have made the data volatile in recent weeks, the trend in jobless claims points to historically low layoff activity and is consistent with a tight labor market," writes Lydia Boussour, lead U.S. economist at Oxford Economics. Ongoing claims (USJOBN=ECI), reported on a one-week lag, notched a steeper than anticipated decline, coming in at 1.845 million. Jobless claims Jobless claims Groundbreaking on new U.S. homes (USHST=ECI) jumped 11.8% last month to 1.679 million units at a seasonally adjusted annualized rate (SAAR), the highest level since March according to the Commerce Department, notching a 7.1% surprise to the upside. read more Having hit a 14-and-a-half year high last March, builders have since contended with scarcity of lots, labor and materials, despite consistently robust demand supporting new construction. Building permits (USBPE=ECI), among the most forward-looking of housing market indicators, also beat expectations, rising 3.6% to 1.712 million units SAAR. Housing starts Housing starts The balance of the economic data released this morning provided separate takes on U.S. business activity, all of which marched in lockstep to suggest continued expansion, but at a slightly slower pace. The key takeaway: demand remains strong, and the supply chain is showing signs of untangling. Output from American goods-makers (USIP=ECI) increased by 0.5% in November, marking a substantial deceleration from the previous month"s 1.7% increase and falling short of the 0.7% projection. But the report from the Federal Reserve also showed capacity utilization (USCAPU=ECI), cranked up 0.3 percentage points to 76.8%, hitting the consensus nail on the head. Capacity use, a measure of economic slack, has now reclaimed its pre-pandemic "normal." "Overall, manufacturing has fully recovered pandemic-related losses on a rebound in non-auto production. Manufacturing activity is still supported by demand for goods and low inventories," says Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "But restrictions arising from rising infections that further aggravate supply chains and shortages are a downside risk." Industrial output Industrial output The deceleration of industrial production last month was echoed by the December reading of The Philadelphia Federal Reserve"s Business index, which showed factory activity in the mid-Atlantic region took its foot off the accelerator this month. The Philly Fed (USPFDB=ECI) delivered a reading of 15.4, falling a mile short of the expected 30 and marking a departure from Tuesday"s Empire State report, which showed an accelerated expansion in New York factory activity this month. A Philly Fed/Empire State number over zero signifies month-over-month expansion. "Looking ahead, manufacturers in the Philly Fed region look poised to maintain positive attitudes in 2022 as solid demand and a heavy backlog of orders keep them working in a high gear," says Oren Klachkin, lead U.S. economist at OE. "However stubborn supply-chain blockages will limit their ability to keep up with demand." Philly Fed Philly Fed Global financial information firm IHS Markit also had its say regarding U.S. business activity. Markit"s advance "flash" purchasing managers" index (PMI) showed a slight, though unexpected slowdown in both the manufacturing (USMPMP=ECI) and services (USMPSP=ECI) sectors. "Business growth slipped only slightly during the month and held up especially well in the vulnerable service sector," writes Chris Williamson, chief business economist at IHS Markit. "Barring the initial price slide seen at the start of the pandemic, December saw the steepest fall in factory input price inflation for nearly a decade," Williamson adds, while noting "a marked easing in the number of supply chain delays." The respective 57.8 and 57.5 PMI readings for manufacturing and services marked modest drops from the previous month. A PMI number over 50 indicates expanded activity versus the prior month. Markit Flash PMI Markit Flash PMI The over-riding "return to economic normalcy" theme, falling neatly behind Wednesday"s hawkish shift from the Fed, appeared to be benefiting economically sensitive stocks. Wall Street"s major indexes are mixed, with tech (.SPLRCT) pulling the Nasdaq (.IXIC) into the red, while financials (.SPSY) and industrials (.SPLRCI) are boosting the DJI (.DJI) into positive territory. (Stephen Culp) ***** WITH A TILT TOWARD VALUE, MAJOR U.S. INDEXES MIXED (1008 EST/1408 GMT) Wall Street"s main indexes are mixed in early trade Thursday after the Federal Reserve announced a faster wind-down of its pandemic-era stimulus, calming nerves around surging price pressures. Of note, there is a clear tilt in favor of more economically sensitive value-oriented (.IVX) S&P 500 (.SPX) sectors versus growth (.IGX). The IVX/IGX ratio has risen to its highest level since mid-November. With this, energy (.SPNY), banks (.SPXBK), and transports (.DJT) are among outperformers. FANGs (.NYFANG), chips (.SOX), and tech (.SPLRCT) are red. Meanwhile, the U.S. 10-Year Treasury yield is falling to the 1.42% area. That said, the 2s-10s yield spread is steady around 79 basis points. Here is where markets stand in early trade: earlytrade12162021 earlytrade12162021 (Terence Gabriel) ***** SMALL CAPS: READY TO DEMAND SOME ATTENTION AGAIN? (0900 EST/1400 GMT) Small caps have certainly been out-of-favor of late. From its November 8 record intraday high to Wednesday"s intraday low the Russell 2000 index (.RUT) collapsed more than 13%. read more It"s been a rough go for small caps vs large caps for most of 2021. For example, despite the RUT"s record highs in November, the RUT/Dow Industrials (.DJI) ratio actually peaked in early-February as it approached its 2014 high: RUT12162021 RUT12162021 The RUT now finds itself trading below both its 50 and 200-day moving averages (DMA), and on Tuesday it hit its lowest level relative to the DJI since November 2020. That said, despite an October scare which saw the 50-DMA skirt the 200-DMA by just decimals, this closely-watched intermediate-term moving average has been above the longer-term moving average since August 2020. There are around 34 points separating them at this time. Additionally, despite the fresh low relative to the DJI, it was just marginal, and with Wednesday"s rally, the ratio ticked up. Thus, just ahead of the time when market participants may look for a "January effect", when small caps tend to outperform large caps, the RUT appears to be at an important juncture. read more If it can hold its summer 2021 lows in the 2,122/2,107 area, (Wednesday"s low was at 2,130.9063), and reclaim its 50-DMA, now around 2,293, there could be room again to challenge its November high, at 2,459, and even the resistance parallel, which now resides just over 2,500. Conversely, continued RUT weakness which takes out its summer lows, leads to a dead-cross (50-DMA crosses below 200-DMA), and sees the RUT/DJI ratio break even lower can suggest potential for a much greater collapse. This, especially, given that the RUT"s rising 200-week moving average, which could be a strong magnet, is now around 1,725. (Terence Gabriel) ***** FOR THURSDAY"S LIVE MARKETS" POSTS PRIOR TO 0900 EST/1400 GMT - CLICK HERE: read more Terence Gabriel is a Reuters market analyst. The views expressed are his own Our Standards: The Thomson Reuters Trust Principles.