Post-Market Recap
Last Updated 4:30PM EST
Stocks finished up in Thursday’s trading session, with the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 gaining 1.33%, 1.84%, and 2.75%, respectively.
Microsoft (MSFT) made a solid recovery after falling nearly 4% on news that it would reduce its guidance, finishing the day in the green. Chewy had a terrific session, as shares closed 24.2% higher after a strong quarter. On the other hand, PVH only saw a modest gain of 1.9%, as its shares traded mostly sideways.
As of 4:30 p.m. EST, crude oil is up 1.95%, as crude oil inventories came in much lower than expected at -5.068 million versus the forecast of -1.350 million.
This is a measure of the weekly change in the number of barrels held by firms in the U.S. A large miss, such as the one posted on Thursday, indicates that demand is much stronger than anticipated. Indeed, the price of crude oil received a little boost after the report was announced at 11:00 a.m. EST.
Furthermore, the 10-year U.S. Treasury yield remained fairly steady throughout the day, indicating that there was calm among market participants. At the time of writing, the yield was trading around 2.91%.
Initial Jobless Claims Come in Lower than Expected
Last Updated 3:30PM EST
Equity markets are positive heading into the final 30 minutes of the trading session. As of 3:30 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are up 0.83%, 1.33%, and 2.15%, respectively.
At the macro level, the Department of Labor released its Initial Jobless Claims report, which came in better than expected. During the past week, 200,000 people filed for unemployment insurance for the first time. Expectations were for 210,000 individuals.
Also important, Continuing Jobless Claims, which measures the number of unemployed people who qualify for unemployment insurance, also came in lower than expected at 1.309 million versus the estimate of 1.343 million.
Both metrics have been trending downwards since the height of the pandemic, which is no surprise given the tight labor market. It’s interesting to note that Continuing Jobless Claims have trended down more smoothly than Initial Jobless Claims.
This would suggest that although there may be periods where there is a spike in people filing for first-time employment insurance, others are not having a difficult time finding new jobs.
Fed Unlikely to Pause Rate Hikes, Nonfarm Productivity Beats Expectations
Last Updated 12:20PM EST
Equity markets are green halfway into the trading session after a rough start. As of 12:20 p.m. EST, the Dow Jones Industrial Average, the S&P 500, and the Nasdaq 100 are up 0.31%, 0.78%, and 1.41%, respectively. Chewy extended its gains to roughly 20% following its earnings report while PVH remained steady at around a gain of 2.5%
Lael Brainard, the Vice Chair of the Federal Reserve, announced on Thursday that she thinks it is unlikely that the Fed will pause interest rate hikes. She believes that there is still a lot of work to do in order to bring inflation down to the 2% target and that the Federal Reserve will do whatever it takes to achieve its target.
Furthermore, the Bureau of Labor Statistics released its U.S. Nonfarm Productivity report, which measures the annualized quarter-over-quarter change in labor efficiency, excluding the farming industry.
The report came in slightly better than expected, at -7.3% compared to the -7.5% forecast. Nevertheless, the report indicates that labor efficiency has declined. This is likely due to worker shortages, as it has led to higher wage increases while also causing many firms to operate below capacity.
OPEC+ Expected to Increase Production, Nonfarm Employment Change Misses Expectations
Last Updated 10:00AM EST
Stocks are in the red after the first 30 minutes of trading, with the Dow Jones Industrial Average and the S&P 500 down 0.55% and 0.26%, respectively.
Meanwhile, Chewy and PVH are green, up 16% and 2.5%, respectively, after reporting solid results. On the other hand, Hewlett Packard Enterprise is down 7%.
In addition, crude oil was initially down on reports that OPEC+ would increase its supply hikes. However, the price recovered and is now positive on the day. This is likely due to the fact that certain countries, such as Russia, won’t be able to meet the new quota. As a result, the actual production increase will most likely be lower than announced.
Furthermore, on Thursday, Automatic Data Processing (ADP) released its Nonfarm Employment Change report, which is the change in non-farm, private employment on a month-over-month basis. The number came in at 128,000 for the month of May – well below the expected 300,000. This suggests that hiring might be slowing down in the U.S. economy as companies continue to face macroeconomic uncertainties.
Pre-Market Update
Stock futures were slightly higher in the early morning trading hours of Thursday, as investors remained cautious about the future of the economy. The problem of inflation, which needs no introduction, is the topmost concern, aggravated by burgeoning oil prices. The Federal Reserve is turning more hawkish everyday, considering stronger crackdown on inflation by way of interest rate hikes.
Futures on the Dow Jones Industrial Average (DJIA) scraped 0.32% higher, and those on the S&P 500 (SPX) gained 0.49%, as of 4:32 a.m. EST, Thursday. Meanwhile, the Nasdaq 100 (NDX) futures moved above the flatline by 0.71%.
The after-hour activities were balanced out by strong gains in some companies and deep losses in others. While pet retailer Chewy (CHWY) and apparel retailer PVH (PVH) experienced strong gains on solid earnings prints in the extended trading session on Wednesday, IT giant Hewlett Packard Enterprise (HPE) dropped 7% after its top and bottom-line miss.
The regular trading session Wednesday remained pressured by cautious sentiments resulting from JPMorgan (JPM) CEO Jamie Dimon’s warning of an impending “economic hurricane.” The Dow ended the day 0.54% lower, while the S&P 500 and Nasdaq 100 dropped 0.75% and 0.74%, respectively.
Meanwhile, the problem of labor shortages is still running hot, despite April’s jobs report showing a sharp decline in the number of job openings. Nonetheless, a Federal Bank’s report revealed modest economic growth in the U.S. over the past two months, which comes as a ray of hope in these precarious times.
Full Disclosure
