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Advance GDP Estimate Comes in Higher Than Expectations
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We got out first look at Q3 Gross Domestic Product (GDP) this morning — an advanced look, subject to two revisions in the coming months — with a headline of +4.9%, 20 basis points (bps) ahead of consensus estimates. Consumer spending jumped to +4.0% from +0.8% the previous quarter; private domestic investment roared ahead +8.4% in the quarter, while government spending grew +4.6%. The Deflator number came in at +3.5%, 100 bps higher than consensus.
The price index, subtracting food, energy and housing costs reached +1.8% in the quarter, half of the amount expected by analysts. So we can see that inflated prices play a role in Q3 GDP, at least on this primary read, but that spending was willfully up as well. This is likely the strongest GDP number we’ll see for the next year or more, based on economic metrics and interest rate levels.
Interestingly, however, the Q3 Personal Consumption Expenditures (PCE) price index came in a tad below estimates: +2.4% versus +2.5% analysts were looking for. Tomorrow morning, we’ll get the full PCE report, which is expected to remain steady month over month at +0.4%, but come down on core year-over-year to +3.7% from +3.9% reported a month ago. This is the Fed’s preferred metric for determining economic growth, as it includes data from several other reports published throughout the month.
Initial Jobless Claims rose last week, but still reflect a robust workforce: 210K was 10,000 new jobless claims higher than the upwardly revised previous week, which was the lowest print of this past 12-week cycle. Continuing Claims, reported a week in arrears from new claims, ratcheted up to their highest level in 12 weeks, 1.79 million — +63K week over week. Still, sub-1.8 million, or even sub-2 million, articulate a continued strong labor market.
United Parcel Service (UPS - Free Report) outperformed Q3 earnings expectations by 4 cents to $1.57 per share (although well off the $2.99 per share we saw in the year-ago quarter). Revenues of $21.06 billion, however, were a little light from the $21.54 billion anticipated. Full-year revenue guidance was also lower, on labor issues affecting the delivery and logistics giant. Shares are down -4% in the pre-market, -15.5% year to date.
Bristol Myers Squibb (BMY - Free Report) also beat estimates on the bottom line — earnings of $2.00 per share versus $1.76 in the Zacks consensus, for a +13.6% earnings beat — while also coming in a smidge above estimates on the sales side: $10.97 billion, versus $10.94 billion expected. The company did report a delay in reaching sales targets for new drugs treating anemia, psoriasis and multiple sclerosis by a full year. This had led to a -5.5% drop in shares pre-market, adding to the -21% the stock has been down year to date.
Industrial conglomerate Honeywell (HON - Free Report) also outperformed expectations on its bottom line to $2.27 per share — a 5-cent beat. Revenues came in right in line with estimates at $9.21 billion in the quarter, up from $8.95 billion reported in the year-ago quarter. Shares had been trading down in the few days ahead of this earnings release, and shares are down -17% year to date, but this favorable report is not doing anything but keeping pre-market trading flat.
Pre-market futures have gone from bad to better so far this morning: ahead of all this vast reportage, we had been down triple digits on both the Dow and Nasdaq, with the S&P 500 trading down -25 points. Now, within a half hour of the opening bell, we’re -5 points on the Dow, -75 on the Nasdaq and -12 on the S&P. We’ll see Pending Home Sales after regular trading commences, and after today’s close we’ll get earnings from Amazon (AMZN - Free Report) , Intel (INTC - Free Report) and Ford (F - Free Report) .
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Advance GDP Estimate Comes in Higher Than Expectations
We got out first look at Q3 Gross Domestic Product (GDP) this morning — an advanced look, subject to two revisions in the coming months — with a headline of +4.9%, 20 basis points (bps) ahead of consensus estimates. Consumer spending jumped to +4.0% from +0.8% the previous quarter; private domestic investment roared ahead +8.4% in the quarter, while government spending grew +4.6%. The Deflator number came in at +3.5%, 100 bps higher than consensus.
The price index, subtracting food, energy and housing costs reached +1.8% in the quarter, half of the amount expected by analysts. So we can see that inflated prices play a role in Q3 GDP, at least on this primary read, but that spending was willfully up as well. This is likely the strongest GDP number we’ll see for the next year or more, based on economic metrics and interest rate levels.
Interestingly, however, the Q3 Personal Consumption Expenditures (PCE) price index came in a tad below estimates: +2.4% versus +2.5% analysts were looking for. Tomorrow morning, we’ll get the full PCE report, which is expected to remain steady month over month at +0.4%, but come down on core year-over-year to +3.7% from +3.9% reported a month ago. This is the Fed’s preferred metric for determining economic growth, as it includes data from several other reports published throughout the month.
Initial Jobless Claims rose last week, but still reflect a robust workforce: 210K was 10,000 new jobless claims higher than the upwardly revised previous week, which was the lowest print of this past 12-week cycle. Continuing Claims, reported a week in arrears from new claims, ratcheted up to their highest level in 12 weeks, 1.79 million — +63K week over week. Still, sub-1.8 million, or even sub-2 million, articulate a continued strong labor market.
United Parcel Service (UPS - Free Report) outperformed Q3 earnings expectations by 4 cents to $1.57 per share (although well off the $2.99 per share we saw in the year-ago quarter). Revenues of $21.06 billion, however, were a little light from the $21.54 billion anticipated. Full-year revenue guidance was also lower, on labor issues affecting the delivery and logistics giant. Shares are down -4% in the pre-market, -15.5% year to date.
Bristol Myers Squibb (BMY - Free Report) also beat estimates on the bottom line — earnings of $2.00 per share versus $1.76 in the Zacks consensus, for a +13.6% earnings beat — while also coming in a smidge above estimates on the sales side: $10.97 billion, versus $10.94 billion expected. The company did report a delay in reaching sales targets for new drugs treating anemia, psoriasis and multiple sclerosis by a full year. This had led to a -5.5% drop in shares pre-market, adding to the -21% the stock has been down year to date.
Industrial conglomerate Honeywell (HON - Free Report) also outperformed expectations on its bottom line to $2.27 per share — a 5-cent beat. Revenues came in right in line with estimates at $9.21 billion in the quarter, up from $8.95 billion reported in the year-ago quarter. Shares had been trading down in the few days ahead of this earnings release, and shares are down -17% year to date, but this favorable report is not doing anything but keeping pre-market trading flat.
Pre-market futures have gone from bad to better so far this morning: ahead of all this vast reportage, we had been down triple digits on both the Dow and Nasdaq, with the S&P 500 trading down -25 points. Now, within a half hour of the opening bell, we’re -5 points on the Dow, -75 on the Nasdaq and -12 on the S&P. We’ll see Pending Home Sales after regular trading commences, and after today’s close we’ll get earnings from Amazon (AMZN - Free Report) , Intel (INTC - Free Report) and Ford (F - Free Report) .