Coffee With Greta: Good News is Bad News


DJIA Futures: -252 (-0.8%)

SPX Futures: -42 (-1.1%)

NASDAQ Futures: -179 (-1.6%)

Good morning friends!

Futures are dropping as Treasury yields pop after an unexpected drop in unemployment in September. 

Let’s get right to it!

Mixed September Jobs Report

Good news is bad news for Wall Street this morning. 

Job growth came in slightly weaker than expected in September but the unemployment rate fell unexpectedly. 

The Labor Department reported the U.S. added 263,000 jobs last month vs 275,000 expected.

That was the smallest expansion since April 2021. 

The unemployment rate fell to 3.5% vs expectations for it to be unchanged at 3.7%. 

The labor force participation rate edged lower to 62.3% from 62.4% in August.

Average hourly earnings rose 0.3% month to month and 5% year over year. 

Job growth in July was revised higher by 11,000 workers to +537,000 while August was unchanged at +315,000.

Today’s report shows the U.S. labor market maintaining strength amid the Fed’s fight against inflation, giving the bank more room to stay aggressive on rate hikes.

Treasury Yields Pop After Jobs Report

Treasury yields are rising after the release of that September jobs report. 

The 2-year yield is up 7 basis points to 4.33% while the 10-year yield is up 7 basis points to 3.90%. 

The unexpected drop in unemployment and continued wage gains pushed off the possibility of a Fed pivot sooner than planned. 

The Central Bank has said it expects to see a weakening in the labor market before it changes course on rate hikes. 

Judge Delays Twitter, Musk Trial

Twitter (TWTR) shares are down 0.7% ahead of the open after a judge delayed the trial between Twitter and Elon Musk.

The judge pushed that trial to October 28 from the original date of October 17.

Twitter had previously asked to proceed with the trial, accusing Musk of refusing to accept the “contractual obligations” of his agreement to buy the company. 

The delay now gives Musk more time to complete that takeover. 

He revived the purchase offer on Monday but said he needed time to get financing in order. 

In a statement after the judge’s ruling, Twitter said, “We look forward to closing the transaction at $54.20 by October 28th.”

AMD’s Preliminary Results Disappoint

Advanced Micro Devices (AMD) shares are down 6.2% in premarket trade after releasing weak preliminary Q3 results on Thursday. 

The chipmaker reported preliminary revenue of $5.6 billion vs prior guidance of $6.7 billion. 

The company also said its non-GAAP gross margin is expected to come in around 50% vs guidance of 54%.

AMD blamed the miss on “weaker than expected PC market and significant inventory correction actions across the PC supply chain.”

Samsung Warns of Large Q3 Profit Drop

Samsung is anticipating a large drop in its Q3 operating profit.

The chipmaker said today it expects operating profit to be between 10.7 trillion and 10.9 trillion South Korean won. 

That would be down 32% and the first drop since 2019. 

The company blamed weaker memory pricing and demand for that plunge. 

Oil Prices Rise Further

Oil prices are up again today and on track for weekly gains after OPEC+ voted to cut production.

West Texas Intermediate crude futures are up 0.8% to over $89 bbl while Brent crude futures are up 0.7% to over $95 bbl. 

Analysts expect prices to return to $100 bbl as the OPEC+ cut takes effect in November. 

But those gains will be capped by lower demand as the global economy slows.

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