Coffee With Greta: Hot Economy
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DJIA Futures: +133 (+0.4%)
SPX Futures: +37 (+0.8%)
NASDAQ Futures: +219 (+1.4%)
Good morning friends!
Futures are gaining as traders digest hot new economic data and the latest batch of big earnings.
Let’s get right to it!
Q2 GDP Hotter Than Expected
The U.S. economy grew more than expected in the second quarter.
The Commerce Department’s first estimate shows GDP increased at a 2.4% annualized rate vs 2% expected.
That was up from the 2% growth in Q1.
Inflation pressures were also better-than-expected during the quarter.
The personal consumption expenditures price index increased 2.6% vs 3.2% expected, down from 4.1% in Q1.
Consumer spending rose 1.6% in Q2, accounting for 68% of all economic activity during the quarter.
Gross private domestic investment increased 5.7% after dropping 11.9% in the first quarter.
Government spending increased 2.6%.
Weekly Jobless Claims Fall
Weekly jobless claims fell unexpectedly again last week as the labor market maintains strength.
The Labor Department reported 221,000 Americans filed initial claims for unemployment benefits.
That was down by 7,000 from the previous week and lower than 235,000 expected.
Continuing claims also dropped by 59,000 to 1.69 million in the week ending July 15.
Meta Rallies
Meta Platforms (META) shares are rallying 9.9% ahead of the open after beating Q2 expectations and issuing strong guidance.
Here’s how the social media giant’s results compared to analysts’ estimates:
- EPS: $2.98 vs $2.91 expected
- Revenue: $32 billion vs $31.12 billion expected
- Daily Active Users: 2.06 billion vs 2.04 billion expected
- Monthly Active Users: 3.03 billion vs 3 billion expected
- Average revenue per user $10.63 vs $10.22 expected
Revenue was up 11% year over year, the first quarter of double-digit growth since the end of 2021.
Meta forecast Q3 revenue between $32 billion and $34.5 billion vs $31.3 billion expected.
That figure suggests 15% growth annually.
Chipotle Drops
Chipotle Mexican Grill (CMG) shares are falling 7.8% in premarket trade after missing Q2 revenue expectations.
Here’s how the restaurant chain’s results compared to analysts’ estimates:
- Adjusted EPS: $12.65 vs $12.31 expected
- Revenue: $2.51 billion vs $2.53 billion expected
Revenue was up 13.6% year over year while same-store sales grew 7.4% vs 7.5% expected.
Chipotle saw lower costs for avocados during the quarter but higher prices for tortillas, beef, and dairy still put pressure on profit.
Despite previously saying they were done hiking prices, the CEO seemed more open to another round of prices increases in the future.
He said, “As we get closer to that fourth quarter, we’ll make a decision exactly on what we want to do on the pricing front.”
Chipotle reiterated its full-year forecast.
McDonald’s Beats
McDonald’s (MCD) shares are up 1.3% ahead of the open after beating Q2 expectations on the top and bottom line.
Here’s how the fast food chain’s results compared to analysts’ estimates:
- Adjusted EPS: $3.17 vs $2.79 expected
- Revenue: $6.5 billion vs $6.27 billion expected
Global same-store sales jumped 11.7% vs 9.2% expected.
Same-store sales in the U.S. rose 10.3%.
Southwest Slips
Southwest Airlines (LUV) shares are falling 5.5% in premarket trade after missing Q2 profit expectations but beating on revenue.
Here’s how the airline’s results compared to analysts’ estimates:
- Adjusted EPS: $1.09 vs $1.10 expected
- Revenue: $7.04 billion vs $6.98 billion expected
Profit tumbled 10% year over year while total revenue rose 4.6%.
But Southwest’s unit revenue dropped 8.3% from a year ago and the company said it expects unit revenue to fall as much as 7% in Q3 despite capacity being 12% higher.
Southwest’s operating expenses also jumped more than 12%.
Excluding fuel, those expenses were up 7.5%.
In Case You Missed It
- The Federal Reserve raised the federal funds rate on Wednesday by 25 basis points as expected. That puts the benchmark rate in a range of 5.25% to 5.5% – the highest since March 2001. The Fed reiterated it will remain “data dependent” in future meetings and Chairman Jerome Powell said they could either raise rates again or leave them unchanged in September.
- New home sales dropped unexpectedly in June. The Census Bureau reported new home sales fell 2.5% last month to a seasonally adjusted annual rate of 697,000 units vs 725,000 expected. New home sales in May were also revised lower to 715,000 units from 763,000 previously.