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All Good Things: PPI, Jobless Claims, Q3 Earnings

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Thursday, October 14, 2021

Initial Jobless Claims
hit a fresh post-Covid low last week, as reported this morning: 293K new claims were made, down from the 318K analysts were expecting and the first 2-handle we’ve seen since prior to the pandemic taking hold. It’s also a big step down from the previous week’s 326K, which was the second-lowest weekly new jobless claims total during the pandemic era, following only the shortened week of Labor Day.

Continuing Claims also reached a new post-Covid low to 2.593 million, which took out the previous Labor Day week low 2.715 million. These numbers are posted a week in arrears, so we may expect another leg down when this week’s new claims numbers hit the tape a week from today. But what economists really want to see in this longer-term jobless claims data is the weekly figures eventually move sub-2 million.

We also see new Producer Price Index (PPI) data for September this morning, with final demand coming in at +0.5%, 10 basis points lower than the +0.6% analysts were expecting and notably below the +0.7% reported for August. It also represents the smallest increase this year, and a bit at odds with the latest Consumer Price Index (CPI) posted earlier in this week, which went up 10 basis points from analyst expectations.

Subtracting volatile food and energy costs brings us to the monthly “core” number, which came in well beneath expectations: +0.2% versus +0.5% consensus. This asserts that producer pricing beyond those volatile prices we see at gas stations, restaurants and grocery stores is weaker than expected. Year over year PPI numbers also demonstrate strength, but there remains a wide gap between headline and core reads.

Bank of America (BAC - Free Report) beat expectations this morning outperformed estimates on both top and bottom lines: 85 cents per share topped the 71 cents expected (well above the 51 cents per share reported in the year-ago quarter) for a nearly 20% positive surprise, on $22.77 billion in revenues, which came in more than 4% higher than analysts were looking for. Shares are up +2.5% in the pre-market on the news; the bank major is +42.3% year to date. For more on BAC’s earnings, click here.

Wells Fargo (WFC - Free Report) , a Zacks Rank #4 (Sell)-rated bank ahead of earnings, also topped estimates: $1.17 per share versus $1.03 in the Zacks consensus (and a paltry 56 cents per share, comparatively, in the pandemic-ravaged year-ago quarter) on $18.83 billion in revenues, which surpassed expectations by 2.2% (though down from the year-ago quarter’s $18.86 billion). Shares of Wells Fargo have grown 52.6% year to date, and are up another +1.2% in today’s pre-market. For more on WFC’s earnings, click here.

UnitedHealthcare (UNH - Free Report) is another winner this morning on Q3 earnings results: $4.52 per share beat the Zacks consensus by 11 cents on $72.34 billion in revenues, beating expectations by +1.12%, and notably beyond the $65.12 billion reported in the year-ago quarter). Shares are seeing a strong 5% burst on this news; UnitedHealth had been underperforming the S&P 500 year to date, +15.1% versus +16.2%, respectively. For more on UNH’s earnings, click here.

Pre-market indexes have really hit their stride, looking at a positive week thus far. The Dow is +350 points ahead of the bell, the Nasdaq is +160 points and the S&P 500 is +40. Market participants now see employment results moving to where the need to be, supply-chain issues being addressed by the federal government and the Federal Reserve ready to make a move on asset tapering — all good things.

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