Coffee With Greta: Hot Job Growth Is Bad News For Traders
DJIA Futures: -426 (-1.2%)
SPX Futures: -64 (-1.6%)
NASDAQ Futures: -274 (-2.3%)
Good morning friends!
Futures are tumbling after the release of hot jobs data.
Let’s get right to it!
November Payroll Growth Runs Hot
Job growth stayed hot in November despite the Fed’s rate hikes.
The Labor Department reported the U.S. economy added 263,000 jobs last month.
That as higher than expectations for 200,000 but still a decrease from the revised 284,000 in October.
The unemployment rate was unchanged at 3.7%, in line with expectations.
The labor force participation rate remained well below pre-pandemic levels at 62.1%.
The leisure and hospitality sector added 88,000 jobs in November, led by a 62,000 worker gain in restaurants and bars.
Healthcare employers added 45,000 workers, while government added 42,000 jobs.
Only two major sectors saw declines last month.
Retail trade lost 30,000 workers in November while transportation and warehousing employment declined by 15,000.
Wages continued to increase more than expected last month with average hourly earnings up 0.6% monthly and 5.1% year over year vs 0.3% monthly, 4.6% annually expected.
Job growth in October was revised higher by 23,000 while September was revised down by 46,000.
Treasury Yields Jump After Hot Jobs Report
Treasury yields are popping higher this morning after the release of that hot employment data.
The 2-year yield is up 12 basis points to 4.35% while the 10-year yield is up 9 basis points to 3.60%.
The strong job growth is not good news for traders who are hoping for a Fed pivot later this month.
The Central Bank has said a weaker labor market will be key to lowering inflation.
The Fed has raised particular concern about wage inflation, which continued to push higher in November.
CME Group’s FedWatch Tool shows 69.9% of traders still anticipating a 50 basis point hike at the next meeting while 30.1% expect a 75 basis point move.
Oil Prices Fall Flat
Oil prices are flat this morning but still on track for weekly gains.
West Texas Intermediate crude futures are up just 0.1% at $81 bbl while Brent crude futures are up 0.1% at $87 bbl.
Easing Covid restrictions in two Chinese cities are helping to pare losses from rising strength of the U.S. dollar.
The dollar edged higher this morning after dropping to 16-week lows.
Ulta Crushes Q3 Expectations, Hikes Outlook
Ulta (ULTA) shares are slightly lower today despite beating Q3 expectations.
Here’s how the beauty retailer’s results compared to analysts’ expectations:
- EPS: $5.34 vs $4.15 expected
- Revenue: $2.34 billion vs $2.21 billion expected
Comparable sales soared 14.6% year over year as shoppers continue to spend on makeup.
The CEO said the results “reflect the sustained resilience of the beauty category and the strong emotional connection and loyalty we have cultivated with our guests.”
Ulta hiked its full-year earnings forecast to between $22.60 and $22.90 per share.
That’s was up from $20.70 to $21.20 per share previously.
The company also expects revenue to be between $9.95 billion and $10 billion vs $9.65 billion and $9.75 billion previously.
That higher guidance also topped analysts’ expectations for $21.40 EPS o $9.77 billion in revenue.
Ulta expects full-year comparable sales growth of 12.6% to 13.2% year over year.
In Case You Missed It
- The U.S. manufacturing sector contracted for the first time since the beginning of the pandemic last month. The Institute for Supply Management’s Manufacturing PMI fell to a 30-month low of 49% in November. That was down from 50.2% in October and lower than expectations for 49.2%. Any reading below 50% signals a contraction in factory activity.