Coffee With Greta: Economic Data Sends Mixed Signals
DJIA Futures: -6 (-0.02%)
SPX Futures: +1 (+0.03%)
NASDAQ Futures: +11 (+0.1%)
Good morning friends!
Futures are flat as traders digest mixed economic data ahead of the Fed Chair’s speech today.
Let’s get right to it!
Private Sector Hiring Cools
Private sector job growth came in lighter-than-expected in November.
Payroll firm ADP reported private employers added 127,000 workers.
That was lower than economists’ expectations for 190,000 and down sharply from 239,000 in October.
The leisure and hospitality sector saw the largest gain, adding 224,000 workers.
But that increase was offset by large losses in other sectors.
Manufacturing lost 100,000 workers in November, professional and business services lost 77,000, financial activities lost 34,000 and information services lost 25,000.
Pay increased 7.6% year over year, down from 7.7% in October.
This is the first piece of key jobs data this week.
The Labor Department releases the October job openings and labor turnover survey at 10:00 a.m. ET today.
Then the official November jobs report will be out Friday morning.
Economists expect that to show a gain of 200,000 jobs with the unemployment rate unchanged at 3.7%.
Q3 GDP Growth Revised Higher
The U.S. economy expanded more than initially estimated in the third quarter.
The Bureau of Economic Analysis’ first revision of Q3 GDP came in at 2.9% vs 2.6% initially.
That revision reflects increases in exports, consumer spending, nonresidential fixed investment, state and local government spending, and federal government spending.
But residential fixed investment and private inventory investment were both lower than initially estimated.
DoorDash Announces Layoffs
DoorDash (DASH) shares are up 2.9% ahead of the open after the company announced new corporate layoffs.
In a message to employees, the CEO said DoorDash is laying off 1,250 corporate employees as part of a continued cost-cutting effort.
That represents about 15% of the company’s workforce.
DoorDash is offering 17 weeks of severance to the impacted employees and healthcare benefits will continue through March 2023.
Fed Chair Set to Speak
Fed Chair Jerome Powell is scheduled to speak at the Brookings Institution at 1:30 p.m. ET today.
Traders are hoping for more insight on the Fed’s plans to pivot to smaller rate hikes starting at the December meeting as recent data shows inflation cooling.
CME Group’s FedWatch Tool shows 69.9% of traders expecting a 50 basis point hike at the December 14 meeting while 30.1% are anticipating another 75 basis point move.
In a tweet this morning, Tesla (TSLA) CEO Elon Musk said the Fed must cut rates “immediately” to stop a severe recession.
He said, “Trend is concerning. Fed needs to cut interest rates immediately. They are massively amplifying the probability of a severe recession.”
The Fed Chair has previously said the U.S. will have to experience some economic pain in order to lower inflation.
But he has also insisted there is still a path to lower inflation without plunging the economy into recession.
The Fed also releases its latest Beige Book at 2:00 p.m. ET today.
Overall Mortgage Demand Drops Despite Lower Rates
Total mortgage demand fell last week despite rates dropping for the third week in a row.
The Mortgage Bankers Association reported total application volume decreased 0.8% last week.
Purchase applications rose 4% weekly but were still down 41% year over year.
Refinance application dropped 13% weekly and 86% annually.
The average 30-year contract rate fell to 6.49% from 6.67%.
Pending Home Sales Expected to Fall
The National Association of Realtors reports October pending home sales at 10:00 a.m. ET.
That report is expected to show a 5.5% decline following the 10.2% decline in September.
Existing home sales slumped 5.9% last month as high mortgage rates squeeze buyers.
It’s also a traditionally slower time of year for home sales.