Coffee With Greta: Fed’s Favorite Inflation Gauge Cools
DJIA Futures: +40 (+0.1%)
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NASDAQ Futures: +35 (+0.3%)
Good morning friends!
Futures are rising as new data shows hot inflation pressures continuing to cool and a new month of trade is set to kick off.
Let’s get right to it!
PCE Inflation Cools
Hot inflation pressures continued to cool in October.
The Bureau of Economic Analysis’ PCE price index rose 0.3% monthly and 6% year over year.
That was in-line with economists’ expectations and a slowdown from 6.2% annual inflation in September.
The Fed’s favorite inflation gauge, the core PCE price index, slowed more than expected.
That index was up 0.2% monthly vs 0.3% expected and 5% annually vs 5.1% in September.
This new data comes after Fed Chair Jerome Powell made dovish comments about rate hikes during a speech at the Brookings Institution on Wednesday.
Powell said, “The time for moderating the pace of rate increases may come as soon as the December meeting.”
But he also warned, “we have a long way to go in restoring price stability.”
The market rallied on those comments with CME Group’s FedWatch Tool now showing 79.4% of traders anticipating a 50bps hike at the December 14 meeting.
Weekly Jobless Claims Tumble
Weekly jobless claims fell more than expected last week.
The Labor Department reported 225,000 Americans filed initial unemployment claims, a 16,000 person decrease from the previous week.
That was better than expectations for 235,000.
Continuing claims rose by 57,000 to 1.61 million in the week ending November 19.
But claims are expected to begin rising soon in the wake of new layoff announcements in recent weeks.
Salesforce Tops Q3 Expectations, Co-CEO Steps Down
Salesforce (CRM) shares are falling 7% ahead of the open after the company beat Q3 expectations but its co-CEO stepped down.
Here’s how the cloud software company’s results compared to analysts’ expectations:
- Adjusted EPS: $1.40 vs $1.22 expected
- Revenue: $7.84 billion vs $7.83 billion expected
Sales of its subscription and support segment rose 13% to $7.23 billion while professional services sales jumped 25% to $604 million.
Co-CEO Bret Taylor also announced he will step down from his position January 31, 2023.
That will leave Marc Benioff as Chair and CEO of the company.
Taylor is the second co-CEO with Benioff to leave Salesforce.
Dollar General Slashes Growth Outlook
Dollar General (DG) shares are dropping 5.7% in premarket trade after missing Q3 expectations and cutting its outlook.
Here’s how the discount retailer’s results compared to analysts’ expectations:
- EPS: $2.33 vs $2.54 expected
- Revenue: $9.46 billion vs $9.42 billion
Dollar General forecast Q3 earnings of $3.15 to $3.30 per share, lower than analysts’ estimates of $3.66.
That implies Q4 EPS growth of 7% to 8% vs 12% to 14% previously forecast.
Dollar General cited higher supply-chain costs for that weaker outlook.
Kroger Hikes Full-Year Outlook
Kroger (KR) shares are up 3.4% ahead of the open after beating Q3 expectations and hiking its full-year outlook.
Here’s how the supermarket chain’s results compared to analysts’ expectations:
- Adjusted EPS: $0.88 vs $0.83 expected
- Revenue: $34.2 billion vs $33.9 billion expected
Same-store sales jumped 6.9% year over year in the quarter vs analysts’ estimates for 4% growth.
Kroger hiked its full-year outlook following the earnings beat.
The company now expects full-year earnings of $4.05 to $4.15 per share vs $3.95 to $4.05 per share previously.
In Case You Missed It
- The number of job openings in the U.S. economy fell more than expected in October. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed there were 10.3 million available jobs in the month. That was down from 10.7 million in September and lower than 10.5 million expected. Vacancies still outnumber available workers 1.7 to 1.
- Pending home sales fell less than expected in October. The National Association of Realtors reported pending home sales dropped 4.6% monthly and plunged 37% year over year. That was better than economists’ expectations for a 5.5% decline and improved from the 8.7% drop in September. Pending sales represent purchase contracts expected to close within 30 to 60 days.