Coffee With Greta: Stocks Drop, Yields Spike On Strong Jobs Report
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DJIA Futures: -213 (-0.6%)
SPX Futures: -41 (-1%)
NASDAQ Futures: -197 (-1.5%)
Good morning friends!
Futures are slipping as Treasury yields pop on a stronger-than-expected May jobs report.
Let’s get right to it!
Hiring Was Still Strong in May
The Labor Department’s official May jobs report beat expectations.
That data was just released, showing the U.S. economy added 390,000 jobs last month.
That was better than expectations for a gain of 328,000.
But it was still the smallest increase in 13 months and broke the 12 month streak of 400,000 or more, as the labor market nears full employment levels.
The unemployment rate held steady at 3.6% vs expectations for a decrease to 3.5%.
The labor force participation rate stood at 62.3% in May, still 1.1% lower compared to February 2020.
Average hourly earnings rose 0.3% from April and jumped 5.2% year-over-year.
Although strong, those wage gains are still lagging behind inflation.
The leisure and hospitality sector continued to lead job gains in May, adding 87,000 workers.
That sector is still down 1.3 million employees from pre-pandemic levels.
Treasury Yields Pop After Strong Jobs Report
Treasury yields are rising following the release of that strong jobs data.
The 10-year yield is up about 7 basis points to over 2.97% with the 30-year yield rising 7 basis points as well to over 3.15%.
The strong jobs data gives more support to the Fed’s plans to move ahead aggressively with larger rate hikes.
Tesla Slides After Elon Musk Orders Hiring Freeze, Job Cuts
Tesla (TSLA) shares are down 4.4% following reports he has ordered a hiring freeze at the company.
Reuters reported Musk sent an email to executives on Thursday which was titled “pause all hiring worldwide”.
In that message, Musk reportedly said he has a “super bad feeling” about the economy and they need to cut about 10% of jobs.
Tesla’s annual SEC filing showed it had nearly 100,000 employees at the end of 2021.
Coinbase Extends Hiring Pause
Coinbase (COIN) shares are falling 4.1% ahead of the open after the company announced it will extend a hiring pause for the “foreseeable future”.
In a blog post, the company also said it would rescind some already accepted job offers.
Coinbase said it will help those impacted by that move with job placement and resume reviews.
The company’s chief people officer said, “If we’re flexible and resilient, and remain focused on the long term, Coinbase will come out stronger on the other side.”
Lululemon Rises On Earnings Beat
Lululemon (LULU) shares are up 1.1% ahead of the open after beating fiscal Q1 expectations.
The athletic apparel retailer reported earnings of $1.48 per share on $1.61 billion in revenue.
That topped analysts’ expectations for EPS of $1.43 on $1.53 billion in revenue.
Revenue rose 32% year-over-year and the company hiked its guidance.
Lululemon expects fiscal Q2 revenue between $1.75 billion and $1.78 billion vs analysts’ expectations for $1.71 billion.
The company forecast full-year revenue between $7.61 billion and $7.71 billion, up from its prior forecast for $7.49 billion to $7.62 billion.
Analysts were expecting $7.54 billion in full-year sales.
Apple’s Impending Death Cross
Apple (AAPL) is poised to see an ominous pattern on its stock chart.
The stock’s 50-day moving average is on track to drop below its 200-day moving average, in a move known as a “death cross”.
Apple’s last death cross appeared on December 20, 2018.
The 50-DMA has declined by an average of $0.30 over the past 20 sessions and fell to $159.573 on Thursday while the 200-DMA rose to $159.489.
At that pace, the death cross is expected to happen today.
AAPL shares are down 1.9% in premarket trade.
Oil Prices Slip
Oil prices are rising modestly amid tight supply concerns.
West Texas Intermediate crude futures are up 0.3% to over $117 bbl while Brent crude futures are up 0.4% to over $118 bbl.
Opec+ agreed on Thursday to increase its oil output faster.
The group will increase production by 638,000 barrels per day in July and August.
That’s ramped up from the 432,000 bpd increases over the past few months.
The Energy Information Administration also reported a steep drop in U.S. inventories on Thursday.
The EIA says crude stockpiles tumbled by 5.1 million barrels last week while gasoline inventories dropped by 700,000 barrels.
Analysts were expecting a 500,000 barrel drop in oil supplies and 100,000 barrel decrease in gas stockpiles.
U.S. Gas Prices Surge to Fresh Record
The national average for a gallon of regular gas jumped sharply again overnight.
AAA shows that price jumped to $4.761/gal today.
That was an increase of nearly 5 cents from yesterday.
It’s the third day in a row prices have jumped by more than 4 cents overnight.
The state with the lowest average price currently is still Georgia, at $4.221/gal.
The highest state average is in California which rose more than 3 cents overnight to $6.246/gal.
In Case You Missed It
- Microsoft (MSFT) slashed its fiscal Q4 outlook Thursday citing “unfavorable” foreign exchange rates. The company lowered guidance for both sales and profit to ranges below analysts’ estimates. The stock initially fell on that news but then rallied into the close. MSFT shares are down 1.4% ahead of the open.
- Cloud stocks led the rally in tech stocks on Thursday. UiPath (PATH) shares surged 17% after reporting a narrower-than-expected Q1 loss and hiking its full-year guidance. Elastic (ESTC) and Datadog (DDOG) shares also jumped sharply, closing 19% and 13% higher respectively.