STOCKS FALL, BUT HAVE BEST JANUARY IN YEARS: Here's What You Need To Know

First the scoreboard:

Dow: 13,860, -49.8, -0.3 percent
S&P 500: 1,498, -3.8, -0.2 percent
NASDAQ: 3,142, -0.1, -0.0 percent

And now the top stories:

• Initial jobless claims surged to 368k, from 330k a week ago. Economists were looking for a jump, but only to 350k.
• The rebound in jobless claims was largely due to some widely-anticipated seasonal factors that may have prevented some states from reporting all of their claims in the prior week's report. Because noise was expected in the numbers, the markets basically brushed off the seemingly disappointing report.
• The Chicago PMI report surged to 55.6, crushing expectations for a reading of 50.5. This was largely due to the employment sub-index, which jumped to 58.0 from 46.8 a month ago. This was the largest gain since February 2002.
• In a note to clients, Miller Tabak Chief Economic Strategist Andrew Wilkinson wrote that the Chicago PMI report might be sending a bullish signal about tomorrow's nonfarm payrolls report. Indeed, of the last five times the Chicago PMI employment sub-index jumped by such a wide margin, the nonfarm payrolls number came in ahead of expectations four times.
• January ended with a solid 5 percent gain in the S&P 500. According to Zerohedge, this was the best January since 1989. "As goes January, so goes the year," or so the saying goes.
• Deutsche Bank's David Bianco believes that the 'January Effect' will play out this year again. In a new note, he writes about four recent experiences when stocks fell, despite a strong gain. In 2001, they fell after the 9/11 attacks. In 2011, the markets ended flat for the year. In 1966 and 1994, stocks fell "owing mostly to Fed tightening."
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