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So the bullishness in early trading today evaporated the closer it got to the Fed’s decision to raise interest rates another 75 basis points (bps) to a range of 3.75-4.00% tomorrow afternoon. Even though this figure seems to have been baked into the cake as of three weeks ago or so, since then there’s been another creeping hopefulness that the Fed is ready to slow its roll past the November meeting.
After today’s Job Openings and Labor Turnover Survey (JOLTS) for September, this hopefulness soured. Instead of ducking below 10 million job openings for the first time since June 2021 as expected, the headline went the other way: 10.7 million, up from an upwardly revised 10.3 million for August. These stubbornly robust “worker’s market” numbers are not going to help convince the Fed to take its foot off the interest rate gas.
Hires were lower than expected at 6.1 million, while job quits remained steady at 4.1 million, or 2.7% month over month. Construction and Healthcare still have lots of openings, especially in the South, +6.9%, and Midwest, +6.5%. The good news here is these jobs generally are not on the high ends of the pay scale, nor are they in the most expensive regions. Unemployment per job opening reached +0.5%; by comparison, this is way down from the +4.9% in April 2020 and +6.5% in July 2009.
S&P PMI Manufacturing for October tipped back above the 50-level, indicating growth versus contraction: 50.4, from 49.9 the previous month. ISM Manufacturing also performed a tad better than expected, 50.2% from 50.0% expected, though down from the 50.9% in September. In normal times, this would be looked at as a healthy, if tepid, gathering of equilibrium in domestic goods-producing; nowadays, we’re prone to think it’s yet another talon to dig in from a hawkish Fed.
And Construction Spending for September also flipped to a positive: +0.2% from -0.6% expected and a slightly upwardly revised -0.6% for August. Again, we’re looking at pleasantly healthy numbers and also looking back into late summer, but nothing proving to the Fed they’re making any headway on these inflation metrics.
The fear is, of course, that the Fed will tighten too far and not recognize something's broken until it’s too late. Take all this data from earlier today: if each of these headlines takes a significant downturn for recent months not yet recorded, resulting in a drastically slowing economy in key areas like goods-producing and the labor market, it might make the Fed’s 75-bps hike tomorrow a bridge too far. Thus, we’re likely not only still in bear-market-rally conditions, but also “good news is (still) bad news.”
Advance Micro Devices (AMD - Free Report) met earnings expectations of 67 cents per share today, following the company’s lower guide last month. Revenues of $5.57 billion is only marginally lower than expected, though next-quarter revenue guidance was down as well. Softer PC demand in the quarter was a main headwind for the company, which achieved its Zacks Rank #5 (Strong Sell) on its preannouncement. Shares are up +3% on the earnings release; perhaps the report is better than feared.
Carrying a Zacks Rank #1 (Strong Buy) rating into its Q3 earnings report, Airbnb (ABNB - Free Report) outperformed on both top and bottom lines: earnings of $1.79 per share on sales of $2.88 billion outpaced the $1.43 per share and $2.85 billion (itself a triple-digit year-over-year gain in revenues), respectively. Its Average Daily Rate was slightly higher than expected, $156 versus $153.50, but downwardly revised revenue guidance for Q4 is causing a -4% sell-off in after-market trading.
Image: Bigstock
Markets Don't Like Prosperity Ahead of the Fed
So the bullishness in early trading today evaporated the closer it got to the Fed’s decision to raise interest rates another 75 basis points (bps) to a range of 3.75-4.00% tomorrow afternoon. Even though this figure seems to have been baked into the cake as of three weeks ago or so, since then there’s been another creeping hopefulness that the Fed is ready to slow its roll past the November meeting.
After today’s Job Openings and Labor Turnover Survey (JOLTS) for September, this hopefulness soured. Instead of ducking below 10 million job openings for the first time since June 2021 as expected, the headline went the other way: 10.7 million, up from an upwardly revised 10.3 million for August. These stubbornly robust “worker’s market” numbers are not going to help convince the Fed to take its foot off the interest rate gas.
Hires were lower than expected at 6.1 million, while job quits remained steady at 4.1 million, or 2.7% month over month. Construction and Healthcare still have lots of openings, especially in the South, +6.9%, and Midwest, +6.5%. The good news here is these jobs generally are not on the high ends of the pay scale, nor are they in the most expensive regions. Unemployment per job opening reached +0.5%; by comparison, this is way down from the +4.9% in April 2020 and +6.5% in July 2009.
S&P PMI Manufacturing for October tipped back above the 50-level, indicating growth versus contraction: 50.4, from 49.9 the previous month. ISM Manufacturing also performed a tad better than expected, 50.2% from 50.0% expected, though down from the 50.9% in September. In normal times, this would be looked at as a healthy, if tepid, gathering of equilibrium in domestic goods-producing; nowadays, we’re prone to think it’s yet another talon to dig in from a hawkish Fed.
And Construction Spending for September also flipped to a positive: +0.2% from -0.6% expected and a slightly upwardly revised -0.6% for August. Again, we’re looking at pleasantly healthy numbers and also looking back into late summer, but nothing proving to the Fed they’re making any headway on these inflation metrics.
The fear is, of course, that the Fed will tighten too far and not recognize something's broken until it’s too late. Take all this data from earlier today: if each of these headlines takes a significant downturn for recent months not yet recorded, resulting in a drastically slowing economy in key areas like goods-producing and the labor market, it might make the Fed’s 75-bps hike tomorrow a bridge too far. Thus, we’re likely not only still in bear-market-rally conditions, but also “good news is (still) bad news.”
Advance Micro Devices (AMD - Free Report) met earnings expectations of 67 cents per share today, following the company’s lower guide last month. Revenues of $5.57 billion is only marginally lower than expected, though next-quarter revenue guidance was down as well. Softer PC demand in the quarter was a main headwind for the company, which achieved its Zacks Rank #5 (Strong Sell) on its preannouncement. Shares are up +3% on the earnings release; perhaps the report is better than feared.
Carrying a Zacks Rank #1 (Strong Buy) rating into its Q3 earnings report, Airbnb (ABNB - Free Report) outperformed on both top and bottom lines: earnings of $1.79 per share on sales of $2.88 billion outpaced the $1.43 per share and $2.85 billion (itself a triple-digit year-over-year gain in revenues), respectively. Its Average Daily Rate was slightly higher than expected, $156 versus $153.50, but downwardly revised revenue guidance for Q4 is causing a -4% sell-off in after-market trading.
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