Coffee With Greta: Strong Private Job Growth Spooks Traders
DJIA Futures: -165 (-0.5%)
SPX Futures: -22 (-0.6%)
NASDAQ Futures: -72 (-0.6%)
Good morning friends!
Futures are falling after the release of strong labor market data.
Let’s get right to it!
Private Payrolls Surge In December
Private sector job growth blew past expectations in December.
Payroll firm ADP reported private employers added 235,000 employees last month.
That was sharply higher than 153,000 expected and up from 127,000 in November.
The services sector led those gains, adding 213,000 workers.
Leisure and hospitality added 123,000, professional and business services grew by 52,000, and education and health services added 42,000.
Wages also continued strong gains with annual pay across all categories up 7.3% year over year.
This data comes ahead of the official December jobs report from the Labor Department on Friday.
That’s expected to show the U.S. economy added 200,000 jobs last month with the unemployment rate unchanged at 3.7%.
Weekly Jobless Claims Drop
Weekly jobless claims fell to a 14-week low at the end of 2022.
The Labor Department reported 204,000 Americans filed initial claims for unemployment benefits last week.
That was down by 19,000 from the week before and better than 223,000 expected.
Continuing claims also dipped by 30,000 to 1.69 million in the week ending December 24.
Trade Deficit Tumbles In November
The U.S. trade deficit narrowed more than expected in November.
The Commerce Department reported that gap tumbled 21% to $61.5 billion.
That was down from $77.8 billion in October and better than $63.1 billion expected.
Bed Bath & Beyond Sinks After Warning
Bed Bath & Beyond (BBBY) shares are plummeting 18.7% ahead of the open after the company warned about slower than expected sales.
The home goods retailer said it now expects fiscal Q3 sales of $1.26 billion vs analysts’ expectations for $1.41 billion.
That’s down from $1.88 billion in the same quarter one year ago.
Bed Bath & Beyond also expects to report a $385.8 million net loss in the quarter, up from $276.4 million a year ago.
The company also issued a “going concern” which is a warning that it likely will not have the cash to cover expenses in the upcoming months.
BBBY is set to report full quarterly results on Tuesday.
Silvergate Capital Tanks
Silvergate Capital (SI) shares are tanking 35.5% in premarket trade after the crypto bank released preliminary Q4 results.
That report showed total crypto deposits plunged 68% at the end of Q4 to $3.8 billion vs $11.9 billion at the end of Q3.
The massive withdrawals came as crypto exchange FTX, which was a Silvergate customer, collapsed.
The bank also said $150 million of its deposits at the end of December were held by customers who had filed for bankruptcy.
Silvergate said it sold $5.2 billion of debt securities to raise cash.
That put its total cash and cash equivalents held at the end of December at $4.6 billion.
The CEO said, “In response to the rapid changes in the digital asset industry during the fourth quarter, we took commensurate steps to ensure that we were maintaining cash liquidity in order to satisfy potential deposit outflows, and we currently maintain a cash position in excess of our digital asset related deposits.”
The bank also announced it’s laying off 200 employees, representing about 40% of its workforce.
Walgreens Tops Fiscal Q1 Expectations, Hikes Outlook
Walgreens (WBA) shares are falling 4.8% ahead of the open despite beating fiscal Q1 expectations.
Here’s how the drugstore chain’s results compared to analysts’ expectations:
- Adjusted EPS: $1.16 vs $1.14 expected
- Revenue: $33.38 billion vs $32.84 billion expected
But Walgreens reported an unadjusted loss of $3.7 billion, or $4.31 per share, driven by a $5.2 billion settlement for opioid-related litigation.
An early cold and flu season drove strong sales in the quarter as demand surged for over-the-counter medications.
Walgreens hiked its full-year sales guidance to $137.5 billion from $133.5 billion previously.
The company maintained its full-year EPS guidance of $4.45 to $4.65 vs analysts’ estimates of $4.50.
GM Reclaims America’s Top Automaker Title
General Motors (GM) shares are slipping 0.8% in premarket trade after the company reclaimed the title of America’s top automaker from Toyota in 2022.
GM reported its total 2022 sales in the U.S. on Wednesday.
The automaker said it sold 2.27 million vehicles in the U.S. last year, up 2.5% year over year.
That topped Toyota’s U.S. sales of 2.1 million vehicles in 2022.
GM sold 623,261 vehicles in the fourth quarter, up 41.4% year over year.
The automaker’s EV sales also surged in Q4, with the company selling 16,108 vehicles vs just 25 a year ago.
In Case You Missed It
- The minutes of the Fed’s December 2022 meeting showed officials are committed to lowering inflation and expect higher interest rates to remain in place for “some time”. The meeting summary said, “Participants generally observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which was likely to take some time.” The Fed’s latest dot plot showed no interest rate cuts beginning until 2024.
- The number of job openings in the U.S. was relatively unchanged in November, a sign the labor market is maintaining strength in the face of the Fed’s rate hikes. The Labor Department’s Job Openings and Labor Turnover Survey showed there were 10.46 million unfilled jobs in November, down just slightly from the upwardly revised 10.51 million in October. The number of job openings outnumbered unemployed workers by 1.7 to 1. That’s well above pre-pandemic levels of 1.2 to 1.
- Apple (AAPL) reclaimed its $2 trillion market cap on Wednesday. The iPhone maker’s stock closed 1.03% higher at $126.36 per share. That put its valuation at $2.088 trillion. The company’s market cap slipped under that key level Tuesday for the first time since May 2021.