Coffee With Greta: Piping Hot Jobs Report
DJIA Futures: -189 (-0.6%)
SPX Futures: -45 (-1.1%)
NASDAQ Futures: -224 (-1.7%)
Good morning friends!
Futures are tumbling after the release of a piping-hot January jobs report.
Let’s get right to it!
Job Growth Surges
U.S. job growth surged past expectations in January.
The Labor Department reported the U.S. economy added 517,000 jobs last month with the unemployment rate falling to 3.4%.
That was sharply higher than expectations for 187,000 jobs and the unemployment rate to tick up to 3.6%.
It was the strongest monthly gain since July 2022 and the lowest unemployment rate since May 1969.
The leisure and hospitality sector continued to lead the monthly gains, adding 128,000 jobs.
While job creation surged, wages also posted solid gains.
Average hourly earnings rose 0.3% monthly and 4.4% year over year.
The data is bad news for traders who are betting the Fed will pause rate hikes after March and approve two rate cuts at the end of the year.
The central bank has said it needs to see a weakening in the labor market to make a real difference on inflation.
Treasury Yields Surge After Hot Jobs Report
U.S. Treasury yields are rallying this morning after the release of that hot jobs report.
The 2-year yield is up 14 basis points to 3.42% while the 10-year yield is up 9 basis points to 3.5%.
The new data underscored the strength of the U.S. labor market even in the face of the Fed’s aggressive monetary policy.
Apple Drops On Big Earnings Miss
Apple (AAPL) shares are falling 1.9% ahead of the open after reporting its largest quarterly revenue decline since 2016.
Here’s how the iPhone maker’s fiscal Q1 results compared to analysts’ expectations:
- EPS: $1.88 vs $1.94 expected
- Revenue: $117.15 billion vs $121.10 billion expected
That was Apple’s first EPS miss vs expectations in nearly seven years.
Sales in the key holiday quarter dropped 5.5% from a year ago, the first year-over-year decline since 2019.
Apple CEO Tim Cook blamed the weak results on the strong dollar, production issues in China for the iPhone 14 Pro and Pro Max, and the overall macroeconomic environment.
The company did not provide fiscal Q2 guidance.
Amazon Falls On Light Guidance
Amazon (AMZN) shares are dropping 5.8% in premarket trade as light guidance overshadows a Q4 revenue beat.
Here’s how the tech giant’s results compared to analysts’ expectations:
- EPS: $0.03, not comparable to estimates because of a $2.3 billion pre-tax non-cash loss on the value of the company’s stake in Rivian
- Revenue: $149.2 billion vs $145.42 billion expected
- Amazon Web Services Revenue: $21.4 billion vs $21.87 billion expected
- Advertising Revenue: $11.56 billion vs $11.38 billion expected
Amazon’s Q4 sales were higher than its own prior guidance while its $2.7 billion in operating income was in line with estimates.
The company’s full-year 202 sales totaled $514 billion, up 9% year over year.
Amazon lost $2.7 billion last year, including a $12.7 billion loss from its position in Rivian (RIVN).
The company expects Q1 revenue to range between $121 billion and $126 billion, sharply missing analysts’ estimates of $139.2 billion.
CEO Andy Jassy said, “In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon.”
Alphabet Misses Q4 Expectations
Alphabet (GOOGL) shares are 4% lower ahead of the open after missing Q4 expectations on the top and bottom line.
Here’s how the tech giant’s results compared to analysts’ estimates:
- EPS: $1.05 vs $1.18 expected
- Revenue $76.05 billion vs $76.53 billion
YouTube ad revenue was the biggest drag on overall sales, coming in at $7.96 billion vs $8.25 billion expected and down from $8.63 billion the year before.
Alphabet said it will incur a charge of between $1.9 billion and $2.3 billion, mostly in the current quarter, related to the layoffs it announced in January.
Ford Misses Q4 Profit Expectations, Reports Full-Year Loss
Ford (F) shares falling 7.6% in premarket trade after missing Q4 profit expectations and reporting a net loss for the full-year.
Here’s how the automaker’s results compared to analysts’ expectations:
- Adjusted EPS: $0.51 vs $0.62 expected
- Automotive revenue: $41.8 billion vs $40.37 billion expected
Ford’s profits were $11 billion lower than Q4 2021.
For the full year, the company lost $2 billion.
CEO Jim Farley said, “We should have done much better last year. We left about $2 billion in profits on the table that were within our control, and we’re going to correct that with improved execution and performance.”
CFO John Lawler said the disappointing earnings were mainly due to execution and supply chain management issues.
He said, “Our cost structure is not competitive. Our quality is not where it needs to be. And we will take the actions and be more aggressive about making sure that we’re making progress on both of those key areas for us in 2023.”
Ford said it expects to earn between $9 billion and $10 billion in adjusted ebitda this year.
Starbucks Drops After Fiscal Q1 Miss
Starbucks (SBUX) shares are down 2.2% ahead of the open after missing fiscal Q1 expectations.
Here’s how the coffee giant’s results compared to analysts’ estimates:
- Adjusted EPS: $0.75 vs $0.77 expected
- Revenue: $8.71 billion vs $8.78 billion expected
The miss was mainly due to lower sales in China, the company’s second-largest market.
Same-store sales in China plunged 28% last quarter while same-store sales in the U.S. rose 10%.
Starbucks expects 10% to 12% revenue growth this year and adjusted EPS growth of 15% to 20%.
In Case You Missed It
- Coinbase (COIN) shares surged 24% on Thursday after a federal securities suit was dismissed. A federal judge dismissed the class-action suit against the company Wednesday. The complaint claimed that Coinbase had engaged in the unregistered sale and offering of securities and failed to register as a New York state broker-dealer. The suit was dismissed with prejudice which means the plaintiffs cannot refile the same case.
