Stocks End Lower, All Eyes On This Morning's Employment Report Stocks closed sharply lower yesterday. The small-cap Russell 2000 and the Nasdaq took the brunt of it, shedding -3.03% and -2.30% respectively.
After Wednesday's heady gains, stocks opened higher on Thursday, but those gains were quickly erased. The headlines cited concerns over a slowing economy. Even though that's what the Fed is counting on to further slow inflation, and to cut rates. Yesterday's Weekly Jobless Claims were up 14,000 at 249K vs. the consensus for 236K. The Challenger Job-Cut Report came in at 25,885 vs. last month's 48,786. The PMI Manufacturing Index slipped to 49.6 vs. last month's 49.5 and views for the same. The ISM Manufacturing Index declined to 46.8 vs. last month's 48.5 and estimates for 48.8. And Construction Spending was down -0.3% m/m, which was an improvement vs. last month's -0.4%, but less than expectations for 0.2%. On a y/y basis it was up 6.2% vs. last month's upwardly revised 9.8% (from the original 6.4%).
It's strange how nobody seemed to care about a slowing economy on Wednesday. But suddenly did on Thursday. It will be interesting to see how this morning's Employment Situation Report is interpreted. Based on the Fed's narrative, they would like to see the pace of hiring slow. Not grind to a halt. Just slow a bit. That will show that the economy is cooling down, and so should inflation. News of slowing (the right amount) was supposed to be cheered. But now we will have to see if a weaker than expected jobs report is good news or bad news. Or if a stronger than expected jobs report is good news or bad. The consensus is calling for 180,000 new jobs to have been created last month (155K in the private sector and 25,000 in private), while the unemployment rate comes in at 4.1%, and average hourly earnings are up 0.3% m/m. In other news, we got a round of earnings after the close yesterday from some marquee names. Apple reported a positive EPS surprise of 4.48%, and a positive sales surprise of 1.59%. That translated to a quarterly EPS growth rate of 11.1% vs. this time last year, and sales growth of 4.87%. They were up 0.20% in after-hours trade. Amazon reported a positive EPS surprise of 17.1%, but a negative sales surprise of -0.44%. That equated to a quarterly EPS growth rate of 95.2% vs. this time last year, and sales growth of 10.1%. But they were off roughly -7% in after-hours trade. And Intel posted a negative EPS surprise of -80.0%, and a negative sales surprise of -0.70%. That came out to a quarterly EPS growth rate of -84.6%, and a sales growth rate of -0.93%. They were down by -5.50% in the regular session before earnings, and another -20% in after-hours following earnings. Today we'll get another 114 companies on deck to report with Berkshire Hathaway, Exxon Mobile and Chevron in queue. Next week will be an even busier week of earnings with 1,755 companies set to report, including Amgen, Uber, Airbnb, Novo Nordisk and Eli Lilly to name a handful. In the meantime, in addition to the jobs report today, we'll also get Motor Vehicles Sales, and Factory Orders.
But the main event will be the jobs report. And that comes out at 8:30 AM ET. Should be a busy day. Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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