Coffee With Greta: Labor Market Strength


DJIA Futures: +99 (+0.3%)

SPX Futures: -1 (-0.01%)

NASDAQ Futures: -67 (-0.4%)

Good morning friends!

Futures are mixed as traders digest stronger-than-expected jobs data.

Let’s get right to it!

Private Job Growth Tops Expectations

The U.S. private sector added more jobs than expected in December. 

Payroll firm ADP reported private employers added 164,000 workers last month. 

That was higher than 130,000 expected and a sharp increase from the downwardly revised 101,000 in November. 

The leisure and hospitality sector led the gains, adding 59,000 jobs. 

Construction added 24,000, other services added 22,000, and financial activities added 18,000. 

Manufacturing lost 13,000 jobs while information services and natural resources and mining both lost 2,000.

The pace of wage growth continued to slow with annual pay increases of 5.4%.

Weekly Jobless Claims Fall

Weekly jobless claims fell more than expected in the final week of 2023. 

The Labor Department reported 202,000 Americans filed initial claims for unemployment benefits last week. 

That was down by 18,000 from the previous week and lower than 219,000 expected. 

Continuing claims fell by 31,000 to 1.855 million in the week ending December 23.

Yields Pop On Strong Jobs Data

Treasury yields are pushing higher this morning after the release of that strong labor market data. 

The 10-year yield is up six basis points at 3.98% while the 2-year yield is up three basis points at 4.37%.

This week’s jobs data is key for traders attempting to assess the Fed’s plans for monetary policy this year. 

CME Group’s FedWatch Tool now shows just over 60% expecting a rate cut at the March 20 meeting, down from over 70% a few weeks ago. 

Walgreens Slashes Dividend

Walgreens Boots Alliance (WBA) shares are down 1.5% after beating fiscal Q1 expectations but slashing its quarterly dividend. 

Here’s how the retail pharmacy giant’s results compared to analysts’ estimates: 

  • Adjusted EPS: $0.66 vs $0.61 expected
  • Revenue: $36.71 billion vs $34.86 billion expected

Revenue jumped 10% year over year and Walgreens reiterated its fiscal 2024 outlook. 

The company cut its quarterly dividend to $0.25 from $0.48.

The CEO said that move is meant to “strengthen [its] long-term balance sheet and cash position.”

The cut brings Walgreens’ dividend yield down to 3.9% from more than 7% previously, which had made it the highest-paying dividend stock in the Dow. 

In Case You Missed It

  • Job openings fell to a 32-month low in November as the labor market cools. The Labor Department’s job openings and labor turnover survey (JOLTS) showed there were 8.8 million available jobs during the month. That was in line with expectations. Quits also dropped to a 33-month low of 3.5 million. There were 1.4 open jobs to every available worker in November, down from the 2 to 1 ratio in 2022. 5.5 million workers were hired during the month, the smallest monthly increase since April 2020.
  • The minutes of the Fed’s December meeting showed members are not ruling out the possibility of more rate hikes. That readout was released Wednesday afternoon. Even as the dot plot showed plans for three rate cuts in 2024, the minutes said those forecasts were associated with an “unusually elevated degree of uncertainty.” They also said “several” officials discussed the need to hold rates steady for “longer than they were currently anticipated.

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