Coffee With Greta: Private Job Growth Tumbles
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Good morning friends!
Futures are higher as traders are laser-focused on the Fed meeting following the release of fresh jobs data this morning.
Let’s get right to it!
Private Job Growth Slows Sharply
Job growth in the U.S. private sector slowed in April as the labor market remains historically tight.
Payroll firm ADP reported private employers added 247,000 workers last month.
That missed economists’ expectations for 390,000 and was a sharp decline from 479,000 in March.
The slowdown was mostly due to a drop off in hiring at small businesses.
Companies with less than 50 employees lost 120,000 workers in April while those with 500 or more employees added 321,000.
The leisure and hospitality sector continued to lead the gains, adding 77,000 jobs last month.
This comes ahead of the official April jobs report from the Labor Department on Friday.
That report is expected to show the U.S. economy added 400,000 workers last month with the unemployment rate slipping to 3.5%.
ADP’s chief economist said, “In April, the labor market recovery showed signs of slowing as the economy approaches full employment. While hiring demand remains strong, labor supply shortages caused job gains to soften for both goods producers and services providers.”
Fed Decision Day
The Federal Open Market Committee releases its rate hike decision at 2:00 p.m. ET.
The Fed is expected to vote in favor of a 0.5% rate hike today and begin the process of drawing down its balance sheet.
The March minutes showed most officials support that runoff happening at a pace of $95 billion per month.
But several Fed officials have since expressed support to be more aggressive and start selling off assets on the balance sheet.
57% of respondents to CNBC’s May Fed Survey said they believe the bank’s aggressive tightening action will lead to a recession.
Moderna Reports Blowout Q1
Moderna (MRNA) shares are rallying 6.4% ahead of the open after crushing Q1 expectations.
The pharmaceutical giant reported adjusted earnings of $8.58 per share on $6.07 billion in revenue.
That smashes analysts’ expectations for adjusted EPS of $5.21 on $4.62 billion in revenue.
Moderna sold $5.9 billion worth of its Covid vaccine in Q1, more than triple from $1.7 billion a year ago.
The company maintained its full-year guidance for $21 billion in Covid vaccine sales.
CVS Rises on Q1 Earnings Beat
CVS (CVS) shares are up 1.6% in premarket trade after beating Q1 expectations.
The pharmacy chain reported adjusted earnings of $2.22 per share on $76.83 billion in revenue.
That was better than analysts’ expectations for adjusted EPS of $2.15 on $75.39 billion in revenue.
CVS saw declining demand for Covid related products during the quarter.
The company administered more than 6 million Covid tests and 8 million vaccines in Q1.
That’s down from 8 million tests and more than 20 million vaccines in Q4.
Same-store sales rose 10.7% year-over-year, pharmacy same-store sales were up 10.1% and front store same-store sales rose 13.2%.
CVS hiked its full-year guidance, forecasting earnings will range between $8.20 and $8.40 per share.
Advanced Micro Devices Earnings
Advanced Micro Devices (AMD) shares are jumping 6.7% ahead of the open after a Q1 earnings beat and strong outlook.
The chipmaker reported adjusted earnings of $1.13 per share on $5.89 billion in revenue.
That beat analysts’ expectations for adjusted EPS of $0.91 on revenue of $5.01 billion.
It was the first time revenue has topped $5 billion as sales surged 71% compared to a year ago.
Sales from the company’s computing and graphics segment jumped 33% year-over-year to $2.8 billion while data-center sales skyrocketed 88% to $2.5 billion.
AMD forecast Q2 revenue between $6.3 billion and $6.7 billion and hiked its full-year forecast to $26.3 billion.
That’s higher than analysts’ estimates for Q2 revenue of $5.14 billion and full-year revenue of $21.48 billion.
Starbucks Reports Strong U.S. Sales
Starbucks (SBUX) shares are 6.8% higher in premarket trade after reporting fiscal Q2 results after-hours on Tuesday.
The coffee chain reported adjusted earnings of $0.59 per share on $7.64 billion.
That was in line with analysts’ EPS expectations but beat estimates for $7.6 billion in revenue.
The company suspended its full-year outlook as Covid lockdowns in China dent international sales.
Starbucks’ same-store sales in the U.S. jumped 12% year-over-year, which helped offset a 23% drop in China.
The company is making big investments in its workers to fend off a union push.
Starbucks plans to spend $1 billion on higher wages, improved training, and store innovation in fiscal 2022.
Employees who have been with the company between 2 to 5 years will get a 5% raise or be paid 5% above the market’s start rate, whichever is higher.
Those with more than 5 years of tenure will get a 7% raise or be paid 10% above the market’s start rate.
Those enhanced benefits will not be offered to workers at the stores that have voted to unionize.
Starbucks is also adding more drive-through locations to boost its sales.
Airbnb Revenue Surges as Travel Rebounds
Airbnb (ABNB) shares are up 5.1% ahead of the open after reporting strong Q1 sales.
The short-term rental company reported a loss of $0.03 per share on $1.51 billion in revenue.
That was better than analysts’ expectations for a loss of $0.29 on $1.45 billion in revenue.
Airbnb reported 102.1 million nights and experiences booked in the first quarter, topping pre-pandemic levels and crossing the 100 million mark for the first time ever.
Revenue was up 70% compared to Q1 2021.
Airbnb expects that strong growth to continue, forecasting Q2 revenue between $2.03 billion and $2.13 billion.
That beat analysts’ estimates for $1.96 billion.
Uber Drops on Q1 Loss
Uber (UBER) shares are falling 3.4% in premarket trade after reporting an unexpected Q1 loss.
The ride-share company reported a loss of $3.04 per share, which was not comparable to analysts’ expectations.
The company’s $6.85 billion in revenue beat expectations for $6.13 billion.
Uber said the loss was caused by its investments in Southwest Asian delivery company Grab (GRAB), autonomous car company Aurora (AUR), and Chinese ride-hailing company DiDi (DIDI).
Q1 adjusted EBITDA was $168 million while gross bookings came in at $24.6 billion.
The company forecast Q2 gross bookings between $28.5 billion and $29.5 billion with adjusted EBITDA between $240 million and $270 million.
Lyft Plunges as Q1 Riders, Forecast Come in Short
Lyft (LYFT) shares are plunging 24.5% ahead of the open after reporting weaker than expected rider numbers in Q1.
The ride-hailing giant reported adjusted earnings of $0.07 per share on $875.6 million in revenue.
That was in line with analysts’ EPS expectations and higher than estimates for $848.9 million in revenue.
Lyft had 17.8 million active riders last quarter, shy of analysts’ expectations for 17.9 million and down from 18.73 million in Q4.
Revenue per rider came in at $49.18, beating analysts’ estimates of $47.20.
The company forecast Q2 revenue between $950 million and $1 billion, below analysts’ expectations for $1.02 billion.
Oil Prices Jump as EU Plans Russian Oil Ban
Oil prices are rallying today after the EU laid out plans to phase out Russian oil imports.
West Texas Intermediate crude futures are up 4% to over $106 bbl while Brent crude futures are up 3.8% to $109 bbl.
The European Commission President proposed a phased-in ban of Russian oil and sanctions against Russia’s largest bank today.
The plan would phase-out Russian crude within six months and refined products by the end of the year.
U.S. crude and fuel stockpiles also fell last week.
The American Petroleum Institute reported crude supplies fell by 3.5 million barrels in the week ended April 29.
That was higher than expectations for a drop of 800,000 barrels.
Natural Gas Prices Extend Rally
U.S. natural gas prices are sitting at the highest level since September 2008.
Prices are up 5.4% today to $8.39 per million British thermal units after surging on Tuesday.
The jump comes as natural gas production is down in the U.S. and the amount of gas in storage is down 21% compared to a year ago.
Natural gas prices surged 30% in April.
Trade Deficit Hits Fresh Record
The U.S. trade deficit surged 22.3% in March, hitting a fresh record high at $109.8 billion.
That’s the first time that gap has ever surpassed $100 billion and was higher than economists’ expectations for $106.7 billion.
Imports skyrocketed 10.3% in March to a record $351.5 billion, while exports rose just 5.6% to $241.7 billion.
In Case You Missed It
- The U.S. labor market was historically tight in March. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed there were a record-high 11.55 million available jobs in March. A record 4.54 million workers also quit their jobs. The gap between openings and unemployed workers to fill those jobs hit a new record-high at 5.6 million.
- The Commerce Department reported U.S. factory orders jumped 2.2% in March. That was more than double economists’ expectations. Durable goods orders rose 1.1% while nondurable goods orders were up 3.2%.