All posts by Greta Wall
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.
Continue Reading -->Coffee With Greta: Tech Decline
DJIA Futures: -113 (-0.3%) SPX Futures: -17 (-0.4%) NASDAQ Futures: -83 (-0.5%) Good morning friends! Futures are dropping as traders continue to sell-off big tech stocks. Let’s get right to it! Tech Slide Continues Tech stocks are leading the decline again this morning after the Nasdaq logged its worst day since October on Tuesday. Apple (AAPL) shares are down 0.4% ahead of the open with other Magnificent 7 names like Nvidia (NVDA), Tesla (TSLA), and Meta (META) all falling more than 1%. The pullback in tech also comes as Treasury yields push higher. The 10-year yield is up three basis points at 3.97% while the 2-year yield is up two basis points at 4.35%. Hawkish Fed Comments Richmond Fed President Thomas Barkin refuses to say rate hikes are definitely done. Speaking at an event this morning, Barking said hikes remain “on the table” if inflation does not continue on a downward path. But he also expressed optimism about the chance for a soft landing saying, “Now, everyone is talking about the potential for a soft landing, where inflation completes its journey back to normal levels while the economy stays healthy. And you can see the case for that.” Barkin compared the Fed’s fight against inflation to landing an airplane, he said, “The airport is on the horizon. But landing a plane isn’t easy, especially when the outlook is foggy, and headwinds and tailwinds can affect your course. It’s easy to oversteer and do too much or understeer and do too little.” CME Group’s FedWatch Tool still shows over 67% of traders expecting the Fed’s first rate cut at the March 20 meeting. The Fed releases the minutes of its December meeting at 2:00 p.m. ET which will give more insight into the discussion around the updated dot plot which showed plans for three rate cuts this year. Mortgage Demand Drops Mortgage demand tumbled at the end of 2023 despite lower rates. The Mortgage Bankers Association reported total application volume dropped 9.4% last week compared with two weeks earlier. Purchase applications ended the year 12% lower compared to a year ago while refinance applications were up 15% year over year. The average 30-year fixed contract rate ended 2023 at 6.76%.
Continue Reading -->Coffee With Greta: New Year
Set a reminder for today’s New Year market discussion with David Prince LIVE at 12:00 pm ET! DJIA Futures: -242 (-0.6%) SPX Futures: -40 (-0.8%) NASDAQ Futures: -183 (-1.1%) Good morning friends! Futures are dropping as the new year of trade begins on Wall Street. Let’s get right to it! Stocks Drop, Yields Climb The major indexes are all falling ahead of the open as yields rise to kick off the New Year. The 10-year Treasury yield is up 9 basis points at 3.97% while the 2-year yield is 10 basis points higher at 4.36%. The market is widely expecting the Fed to approve its first rate cut at the second meeting of the year, with over 69% of traders anticipating a cut on March 20. This will be an important week of data for that outlook on the Fed’s plans. The Labor Department reports job openings for November on Wednesday, ADP releases its private employment report for December on Thursday, and the official December jobs report will be out Friday morning. Apple Drops After Barclays Downgrade Apple (AAPL) shares are falling 2.3% in premarket trade after Barclays downgraded the stock to underweight. The group trimmed its price target to $160 from $161 due to “lackluster” sales of the iPhone 15, specifically in China. In a note, Barclays analyst Tim Long wrote, “We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads and wearables.” Long said he expects that weakness in hardware sales to continue. Tesla Tops Q4 Delivery Estimates Tesla (TSLA) shares are up 0.9% ahead of the open after reporting stronger-than-expected deliveries in Q4. The electric automaker says it delivered 484,507 vehicles in the final three months of 2023 and produced 494,989. That topped analysts’ estimates for 477,000 Q4 deliveries. 461,538 of the vehicles delivered in the quarter were Model 3 and Model Y cars. The number brings Tesla’s total deliveries for the year to 1,808,581 while production totaled 1,845,985. That was better than the company’s own forecast for 1.8 million in deliveries and represents 38% year over year growth in deliveries and 35% production growth.
Continue Reading -->Coffee With Greta: Year End
DJIA Futures: -6 (-0.02%) SPX Futures: -2 (-0.1%) NASDAQ Futures: -7 (-0.04%) Good morning friends! Futures are flat ahead of the final trading day of 2023. Let’s get right to it! Final Day of 2023 The S&P 500 enters today’s trading session less than 0.5% away from a new record high. The index is up 24.6% so far in 2023, with the Dow up 13.8%, and the Nasdaq up 44.2%. The tech-heavy Nasdaq is on track for its largest annual gain since 2003. All three major indexes are also on track for their ninth straight weekly gains, the longest streak for the S&P 500 since 2004. The gains have extended to small caps this month as the Fed signaled plans for three rate cuts in 2024. The Russell 2000 is up nearly 14% in December, on track for its best month since November 2020. Nvidia Announces Slower Gaming Chips For China Nvidia (NVDA) shares are up 0.3% ahead of the open after announcing it will launch an adjusted version of its gaming processor with slower performance in China. A spokesperson told Reuters, the new Nvidia RTX 4090D will be launched in January and has been “designed to fully comply with U.S. government export controls.” The GPU has 11% fewer Compute Unified Device Architecture or “CUDA” cores than versions of the chip sold outside of China. The spokesperson said Nvidia “extensively engaged with the U.S. government” while developing the new chip. Fisker Rallies Fisker (FSR) shares are rallying 9.3% in premarket trade after announcing strong growth in deliveries between the third and fourth quarters. The electric vehicle maker said it grew deliveries by over 300%, driven by strong demand for its Ocean SUV. Deliveries for all of 2023 totaled 4,700 vehicles as Fisker produced 10,142 EVs. The majority of those deliveries were the Fisker Ocean One which is priced at $68,999. The company said it will announce a plan in January to accelerate its sales and deliveries further in 2024. In Case You Missed It Pending home sales were flat in November even as mortgage rates declined. The National Association of Realtors pending home sales index was unchanged at 71.6 last month vs expectations for a 1% increase. Year over year, pending sales declines 5.2%.
Continue Reading -->Coffee With Greta: Counting Down
DJIA Futures: -48 (-0.1%) SPX Futures: -1 (-0.02%) NASDAQ Futures: +44 (+0.3%) Good morning friends! Futures are little changed as traders gear up for the second-to-last trading session of 2023. Let’s get right to it! SPX Inches Toward Record The S&P 500 is inching closer to setting a fresh all-time record before 2023 ends. The index closed within just over 0.3% of its previous closing record on Wednesday. That mark was set at 4,796.56 in January 2022. SPX is on track to finish the year up more than 24%, the Dow is poised to rise more than 13% for the year, and the Nasdaq is on track for yearly gains of more than 44%. All three major indexes are also on track to notch their ninth straight winning week. Bonds Rise Treasury yields are rising this morning as traders continue to assess the economic outlook for 2024. The 10-year yield is up 3 basis points at 3.83% while the 2-year yield is up 2 basis points at 4.26%. Today, CME Group’s FedWatch Tool shows over 73% of traders expecting a March rate cut. Important economic data for the Fed and that decision kicks off right away next week with new labor market data from JOLTS to the December jobs report. Weekly Jobless Claims Jump Weekly jobless claims rose more than expected last week. The Labor Department reported 218,000 Americans filed initial claims for unemployment benefits. That was up by 12,000 from the previous week and higher than 215,000 expected. Continuing jobless claims rose by 14,000 to 1.875 million as expected in the week ending December 16.
Continue Reading -->Coffee With Greta: Quiet Week
Register now for today’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Josh Lefler! DJIA Futures: -5 (-0.01%) SPX Futures: +2 (+0.04%) NASDAQ Futures: +17 (+0.1%) Good morning friends! Futures are flat as the S&P 500 nears a fresh all-time high. Let’s get right to it! Flirting With A Record The S&P 500 closed Tuesday with 0.5% of its previous closing record that was set in January 2022. The major indexes are all set to post strong gains for the year with just three trading days left. In 2023, the Dow is up 13%, the S&P 500 is up 24%, and the Nasdaq has surged 44%. The tech-heavy Nasdaq is on track for its largest annual gain since 2003, when it rallied over 50%. Bonds Continue Downtrend Treasury yields are continuing to fall this morning as traders assess the future of Fed policy in 2024. The 10-year yield is down 5 basis points at 3.85% while the 2-year yield is 1 basis point lower at 4.27%. CME Group’s FedWatch Tool shows nearly 73% of traders expecting the first rate cut at the Fed’s March 20 meeting. The market will be focused on data in the weeks ahead like the jobs report and the CPI to gauge whether those predictions should stand. Oil Prices Stabilize Oil prices are lower this morning after jumping on Wednesday amid tensions in the Red Sea. West Texas Intermediate crude futures are down 0.8% at just under $75 bbl while Brent crude futures are down 0.6% at over $80 bbl. Major shippers resumed passage through the key trade route in the Red Sea today after fresh attacks on ships in the region. The American Petroleum Institute is set to release its inventory report today while the Energy Information Administration will release its report on Thursday. Tesla To Refresh Model Y Tesla (TSLA) shares are up 0.6% ahead of the open following a Bloomberg News report the company plans to revamp its Model Y. The refreshed SUV is expected to be built at the automaker’s plant in Shanghai. It will reportedly feature significant changes to both the interior and exterior and is expected to reach mass production in mid-2024. Sources told Bloomberg the Shanghai factory will pause production for about a week after the new year to upgrade its production capabilities and the plant will need another upgrade later in the year. In Case You Missed It Home prices rose at the strongest pace of 2023 in October. The S&P Case-Shiller national home price index jumped 4.8% from October 2022. That was up from the 4% gain in September. The 20-city index rose 4.9% and the 10-city index rose 5.7%. Detroit saw the largest gain with prices up 8.1%, prices rose 7.2% in San Diego, and 7.1% in New York.
Continue Reading -->Coffee With Greta: Did Traders Make The Nice List?
Register now for tomorrow’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Josh Lefler! DJIA Futures: +15 (+0.04%) SPX Futures: +4 (+0.1%) NASDAQ Futures: +22 (+0.1%) Good morning friends! Futures are up slightly as the final week of 2023 begins. Let’s get right to it! Win Streak Continues The S&P 500 logged its eighth straight weekly gain last week, marking the longest win streak since 2017. The Dow and the Nasdaq also both rose for the eighth consecutive week. The S&P ended last week 0.9% below its all-time closing record of 4,796.56 and the index is 1.3% from its intraday record high. It is a light week of economic data to close out the week. The S&P Case-Shiller home price index will be released at 10:00 a.m. ET today. Then weekly jobless claims, the advanced goods trade balance, advanced retail inventories, and advanced wholesale inventories at 8:30 a.m. ET Thursday. The National Association of Realtors reports pending home sales at 10:00 a.m. ET on Thursday. Bonds Tick Slightly Higher U.S. Treasury yields are up slightly this morning after dipping earlier in the session. The 10-year yield is currently one basis point higher at 3.91% with the 2-year yield up two basis points at 4.36%. Recent data supports the Fed’s plans to cut rates in 2024 after the PCE price index came in lighter than expected on Friday. CME Group’s FedWatch Tool now shows over 74% of traders betting on the first rate cut at the March 20 meeting. Intel Jumps On Israeli Grant Intel (INTC) shares are up 2.2% ahead of the open after news the Israeli government agreed to grant the company $3.2 billion for a new $25 billion chip plant in southern Israel. It is the largest investment Israel has ever made in a company. Intel said the expansion plan for its Kiryat Gat site is an “important part of Intel’s efforts to foster a more resilient global supply chain, alongside the company’s ongoing and planned manufacturing investments in Europe and the United States.” The chipmaker also agreed to buy $16.6 billion worth of goods and services from Israeli suppliers over the next decade. The new plant is expected to open in 2028 and operate through 2035.
Continue Reading -->Coffee With Greta: Will Santa Visit Wall Street?
Register now for next week’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Josh Lefler! DJIA Futures: -60 (-0.2%) SPX Futures: +11 (+0.2%) NASDAQ Futures: +44 (+0.3%) Good morning friends! Futures are mixed after the release of better-than-expected inflation data as Nike (NKE) weighs on the Dow. Let’s get right to it! Two Months Of Gains The major indexes are all on track to close out this week higher, marking the 8th positive week in a row. That’s the longest win streak for the S&P 500 since 2017 and for the Dow since 2019. So far, the S&P is up 0.58% this week, the Dow has gained 0.27%, and the Nasdaq is up 1%. The small-cap Russell 2000 is also on track for its sixth straight positive week. PCE Price Index Comes In Light The Fed’s preferred inflation gauge rose less than expected in November. The personal consumption expenditures price index fell 0.1% monthly and rose 2.6% year over year. That was better than expectations for a 2.8% annual increase and marked the lowest level of inflation since March 2021. It was also the first monthly decrease in the headline number since 2020. The core PCE price index rose 0.1% monthly and 3.2% annually. That was also lower than expectations for a 3.3% annual increase and the lowest since early 2021. Consumer Spending Weak Consumer activity was weaker than expected in November. The Bureau of Economic Analysis reported consumer spending rose 0.2% last month vs 0.3% expected. The data shows consumers spent more on housing, utilities, dining out, and hotel stays last month. But they spent less on gasoline as prices fell. Personal incomes rose 0.4%, topping expectations for 0.2% and outpacing inflation. Nike Tumbles After Slashing Guidance Nike (NKE) shares are dropping 11.7% ahead of the open after reporting mixed fiscal Q2 results and slashing its full-year guidance. Here’s how the sneaker giant’s results compared to analysts’ estimates: EPS: $1.03 vs $0.85 expected Revenue: $13.39 billion vs $13.43 billion expected Sales rose about 1% year over year. Nike’s gross margin increased by 1.7% to 44.6% as the company continued work to lower its inventories. Inventories were down 14% during the quarter. The company now expects full-year revenue growth of 1% and gross margins to expand between 1.4% and 1.6%. Nike said it expects revenue growth in the current quarter to be slightly negative. The CFO said, “Last quarter as I provided guidance, I highlighted a number of risks in our operating environment, including the effects of a stronger U.S. dollar on foreign currency translation, consumer demand over the holiday season and our second half wholesale order books. Looking forward, the impact of these risks is becoming clearer.”
Continue Reading -->Coffee With Greta: Rally Rebound
Register now for next week’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Josh Lefler! DJIA Futures: +253 (+0.7%) SPX Futures: +39 (+0.8%) NASDAQ Futures: +181 (+1.1%) Good morning friends! Futures are rising as stocks rebound from Wednesday’s slump. Let’s get right to it! Weekly Jobless Claims Inch Higher Weekly jobless claims rose less than expected last week as layoffs remain low. The Labor Department reported 205,000 Americans filed initial claims for unemployment benefits. That was up by 2,000 from the previous week and lower than 215,000 expected. Continuing claims decreased by 1,000 to 1.865 million in the week ending December 9 vs 1.88 million expected. Q3 GDP Revised Lower Economic growth in the third quarter has been revised lower. The Commerce Department’s final revision shows the U.S. economy expanded at a 4.9% annual pace in Q3 down from the previous estimate of 5.2%. It was still the largest increase in a decade, excluding the pandemic years. GDP growth has slowed in the final three months of this year, with forecasts for 1% to 2% growth in Q4. CarMax Pops On Earnings Beat CarMax (KMX) shares are up 9.5% ahead of the open after reporting mixed fiscal Q3 results. Here’s how the used-car retailer’s results compared to analysts’ estimates: EPS: $0.52 vs $0.38 expected Revenue: $6.15 billion vs $6.29 billion expected Total used-unit sales fell 2.9% from a year ago while comparable-store used-unit sales dropped 4.1%. CarMax also said it is resuming its buyback program after pausing it a year ago. The company has $2.41 billion remaining in its outstanding authorization to buy back shares and said it purchased 648,500 shares for $41.9 million during Q3. The President and CEO said, “Our third-quarter performance reflects the continued efforts of the team that have resulted in several quarters of sequential improvements across key components of our business, despite the persistent widespread pressures in the used-car industry.” Micron Jumps After Earnings Micron Technology (MU) shares are rising 7.5% in premarket trade after beating fiscal Q1 expectations on the top and bottom line. Here’s how the chipmaker’s results compared to analysts’ estimates: Adjusted loss per share: $0.95 vs $1.01 expected Revenue: $4.73 billion vs $4.58 billion expected The company’s CEO said, “Micron’s strong execution and pricing drove better-than-anticipated first quarter financial results. We expect our business fundamentals to improve throughout 2024.” Micron forecast $5.3 billion in revenue for the fiscal second quarter topping expectations for $4.97 billion. In Case You Missed It Consumer confidence jumped to a five-month high in December. The Conference Board’s consumer confidence index rose 9.7 points to 110.7, topping expectations for 104. Confidence in current economic conditions rose 12 points to 148.5 while the expectations index rose 8.2 points to 85.6. The expectations index is back above the 80 threshold that is seen as a sign of an impending recession. Existing home sales rose unexpectedly in November. The National Association of Realtors reported existing sales rose 0.8% last month to a seasonally adjusted annual rate of 3.82 million units vs 3.76 million expected. The median sales price of an existing home sold in November rose 4% year over year to $387,600, the fifth straight monthly increase. There were 1.13 million homes for sale at the end of November, down 1.7% from October and marking a 3.5-month supply.
Continue Reading -->Coffee With Greta: Hovering Near Records
Register now for today’s free pro trading Q&A on LinkedIn with T3 Trading Group’s Patrick Hawe! DJIA Futures: -59 (-0.2%) SPX Futures: -8 (-0.2%) NASDAQ Futures: -38 (-0.2%) Good morning friends! Futures are sliding as the S&P 500 hovers near record territory. Let’s get right to it! 10-Year Yield Hits 5-Month Low Treasury yields are continuing to fall this morning with the 10-year hitting its lowest level in nearly five months. The 10-year yield is down 6 basis points at 3.88% while the 2-year yield is down 7 basis points at 4.37%. The 10-year hit a low of 3.87% earlier this morning, its lowest since July 27. FedEx Tumbles On Earnings Miss, Weak Outlook FedEx (FDX) shares are dropping 11.2% ahead of the open after missing fiscal Q2 expectations and lowering its full-year outlook. Here’s how the shipping giant’s results compared to analysts’ estimates: Adjusted EPS: $3.99 vs $4.18 expected Revenue: $22.17 billion vs $22.41 billion expected Profit jumped 25% year over year while revenue fell 3%. FedEx credited its cost-cutting initiatives for the increase in profit. The company said it now expects a low-single-digit decline in revenue for the full-year down from its previous forecast for sales to be flat. FedEx maintained its full-year EPS guidance of $17.75. General Mills Cuts Guidance After Revenue Miss General Mills (GIS) shares are falling 3.8% in premarket trade after reporting mixed fiscal Q2 results and lowering its full-year sales guidance. Here’s how the cereal maker’s results compared to analysts’ estimates: Adjusted EPS: $1.25 vs $1.16 expected Revenue: $5.14 billion vs $5.35 billion expected In North America, General Mills’ foodservice net sales were flat, retail net sales fell 2% and net sales in the pet segment were down 4%. International foodservice net sales jumped 2%. The company now expects fiscal-year organic net sales to range between down 1% to flat, down from its previous outlook for 3% to 4% growth. General Mills said that lower outlook reflects “a slower volume recovery in fiscal 2024.” Adjusted operating profit and adjusted diluted EPS are now expected to rise 4% to 5% vs 4% to 6% previously. Mortgage Demand Slips Mortgage demand fell last week despite a continued decline in rates. The Mortgage Bankers Association reported purchase applications fell 1% weekly and 18% year over year. Refinance applications dropped 2% weekly but was 18% higher than the same week a year ago. The decrease came despite the average 30-year fixed contract rate falling to 6.83% from 7.07%. That was the lowest rate since June 2023. The MBA said it expects the Fed’s plans for rate cuts to be good news for the housing market. The group said, “We expect that this path for monetary policy should support further declines in mortgage rates, just in time for the spring housing market. We are forecasting modest growth in new and existing home sales in 2024, supporting growth in purchase originations.” In Case You Missed It Affirm Holdings (AFRM) shares rallied 15.5% on Tuesday after the company announced it is expanding its partnership with Walmart (WMT). Affirm’s buy-now pay-later service will now be a payment option for shoppers at self-checkout kiosks in over 4,500 Walmart stores across the U.S. Shoppers will be able to pre-apply for credit through Affirm and then scan the barcode for that payment option at the self-checkout kiosks.
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