Coffee With Greta: Too Many Jobs for the Fed
DJIA Futures: -97 (-0.3%)
SPX Futures: -8 (-0.2%)
NASDAQ Futures: -11 (-0.1%)
Good morning friends!
Futures are slipping as traders digest new labor market data and look ahead to today’s Fed decision.
Let’s get right to it!
Private Job Growth Comes in Hot
Private employers in the U.S. added more jobs than expected in October.
Payroll firm ADP reported today the U.S. private sector added 239,000 jobs last month vs expectations for just 195,000.
That was up from the downwardly revised 192,000 in September.
The leisure and hospitality sector saw the strongest growth, adding 210,000 jobs.
The report showed wages jumped 7.7% year over year in October
This data comes a day after the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) came in hot.
That survey showed the number of job openings jumped to 10.7 million in September from a revised 10.3 million in August.
That was higher than economists’ expectations for a decline to 9.85 million and is bad news for the Fed as it works to cool the hot labor market.
The official October jobs report on Friday is expected to show the U.S. economy added 205,000 jobs with the unemployment rate unchanged at 3.5%.
Fed Decision Day
Stocks are slipping ahead of the Fed’s latest interest rate hike.
The Central Bank releases that decision at 2:00 p.m. ET.
CME Group’s FedWatch Tool shows 92.2% of traders expecting another 75 basis point hike, which is in line with the Fed’s dot plot.
But the market is more focused on what the bank says about the future.
FedWatch shows 47.7% of traders expecting the Fed to pivot to a 50bps hike in December, with 48.7% anticipating another 75bps move.
AMD Rallies Despite Q3 Miss
Advanced Micro Devices (AMD) shares are up 5.4% ahead of the open despite missing Q3 expectations.
Here’s how the chipmaker’s results compared to analysts’ estimates:
- Adjusted EPS: $0.67 vs $0.68 expected
- Revenue: $5.57 billion vs $5.62 billion expected
Revenue was up 29% year over year but even weaker than AMD’s preliminary results from early October.
The chipmaker forecast $23.5 billion in full-year revenue, down from $26.3 billion previously and lower than analysts’ expectations for $23.88 billion.
Airbnb Slides On Guidance
Airbnb (ABNB) shares are down 4.9% in premarket trade despite beating Q3 expectations on the top and bottom line.
Here’s how the company’s results compared to analysts’ expectations:
- EPS: $1.79 vs $1.47 expected
- Revenue: $2.88 billion vs $2.85 billion expected
- Gross bookings: $15.6 billion vs $15.37 billion expected
Airbnb’s adjusted EBITDA hit a record high $1.5 billion in the quarter.
But the company forecast lower revenue in Q4, “consistent with historical seasonality”.
Airbnb expects revenue between $1.8 billion and $1.88 billion next quarter, in line with estimates of $1.87 billion.
CVS Hikes Outlook
CVS (CVS) shares are up 1.4% ahead of the open after beating Q3 estimates and hiking its outlook.
Here’s how the pharmacy giant’s results compared to analysts’ estimates:
- EPS: $2.09 vs $1.99 expected
- Revenue: $81.16 billion vs $76.75 billion expected
Revenue was up 10% year over year and that marked the 3rd straight quarter CVS has beat profit expectations.
The company raised its full-year outlook following the beat.
CVS now expects adjusted EPS between $8.55 and $8.65, up from $8.40 to $8.60 previously.
Mortgage Demand Slides Further
U.S. mortgage demand fell last week despite rates dropping for the first time in 2 months.
The Mortgage Bankers Association reported overall application volume slipped 0.5%.
Purchase applications fell 1% weekly and were down 41% year over year.
Refinance applications rose 0.2% weekly but were down 85% compared to a year ago.
The average 30-year contract rate decreased to 7.06% from 7.16% the previous week.
That’s the first decline in 2 months but still hovering near a 22-year high.