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Jobless Claims, Q3 GDP Lower than Expected

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Thursday, October 28, 2021

Another big day for data ahead of the opening bell this morning, with some good news and a few disappointments. The market indexes are having no trouble bouncing back from yesterday’s late-day sell-off, however: the Dow is +75 points, the S&P 500 is +15 and the Nasdaq +80.

Initial Jobless Claims last week came in at a new post-Covid low: 281K new claims were made, below the 289K expected and the previous week’s 290K, which itself set a post-Covid low last week. These are among the freshest labor market data, including next week’s monthly payroll reports from ADP (ADP - Free Report) and the U.S. Bureau of Labor Statistics for the month of October.

Continuing Claims also notched a post-Covid low, with a nice drop to 2.243 million longer-term jobless claims from the previous read’s 2.48 million. These figures continue to eat away at those lofty levels of unemployment; we’ll see that we are back on the pre-Covid track once we’re below 2 million long-term jobless claims per week. Clearly, we’re pointed in the right direction.

The initial advance print on Q3 Gross Domestic Product (GDP) came in much lower than expectations: 2.0% in the quarter from 2.8% expected, and way off the pace set in Q2, which had a second revision log 6.7% growth. The rise of the Delta variant in Q3, as well as global supply chain issues and worker shortages within our shores all played a part in the weak GDP headline. There will be two revisions to today’s report; hopefully they will be in the upward direction.

Merck & Co. (MRK - Free Report) made easy work beating estimates on top and bottom lines in the Big Pharma major’s Q3 earnings report, with $1.75 per share easily outpacing the $1.52 expected, and swinging to a year-over-year profit from the year-ago’s $1.74 per share. Revenues of $13.5 billion topped the Zacks consensus by +5.9%. Shares are +2% in the pre-market on the news, breaking to gains year to date. For more on MRK’s earnings, click here.

Caterpillar (CAT - Free Report) was mixed in its Q3 report this morning, outperforming on the bottom line by 40 cents to $2.66 per share on sales of $12.4 billion, which missed the Zacks consensus by -1.38%. Yet shares are up slightly in early trading; the heavy machinery staple is only up 8% year to date. For more on CAT’s earnings, click here.

Shopify (SHOP - Free Report) , on the other hand, put up weak numbers for its Q3, missing on the bottom line for the first time since the company’s IPO: 81 cents per share missed the Zacks consensus by -36.7%. Revenues of $1.12 billion missed by -2.3%. The stock had brought a Zacks Rank #4 (Sell) rating into the earnings report. Shares are down -1% in the pre-market. For more on SHOP’s earnings, click here.

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