Thursday, June 5, 2025

Pre-market futures had been up +0.25% or so across the board, but came back down to “unched” from yesterday’s close following a few key economic data points. These data points were not bad across the board, but they do continue to narrative a subtle unraveling in things like a stout, impervious labor market.

However, these same futures are just now rebounding back into the green on a report that President Trump and President Xi have spoken on the phone this morning -- clearly in hopes that a trade deal between the world’s two biggest economies is imminent. The clock is ticking on +145% tariffs on Chinese imports — including rare earth minerals, which are a key component in many high-tech goods — which would effectively cease trade between the two countries.

Weekly Jobless Claims Remain Somewhat Elevated

One of the true success stories of this economy over the past few years — remember: a 2023 recession was imminent, then it was pushed to 2024, and now we’ve halfway through 2025 still without one — was Weekly Jobless Claims, which remained low, and consistently so. Only one week of claims on the initial side jumped to 259K, back in early October of last year, but we can now see that was an outlier.

Initial Jobless Claims increased to 247K — the highest level since that early October print — up 11K from consensus estimates, and +8K from the prior week’s slightly downwardly revised 239K. Over the past four weeks, we’re up +10K new claims per week than the previous four weeks: 237K from 227K. We’re still not at that October outlier level, but we are starting to see a steady climb of new claims.

Continuing Claims, reported a week in arrears from new claims, notched its second-straight week above 1.9 million: 1.904 million on headline, down from the downwardly revised 1.907 million reported the prior week. Though this threshold does not depict anything dire in domestic employment, it is the first time we’ve been elevated above this level since November of 2021, when longer-term jobless claims were falling precipitously.

Revision to Negative U.S. Productivity Nearly Doubles

The second print for Q1 non-farm Productivity went in a negative direction, as well: -1.5% is the new headline, down from the initial -0.8% reported. This is the lowest read since Q2 2022, and the first negative move on Productivity since Q3 2022. Unit Labor Costs, meanwhile, moved higher than expected by nearly a full percentage point: +6.6%, the highest since Q1 of 2024. These were a result of +5% higher wages and a -1.5% loss of productive output.

Trade Deficit Slims by More than Half in April

For this morning’s good news, the U.S. Trade Deficit in April shrank to -$61.6 billion, better than an expected -$63.3 billion and less than half the all-time record March print of -$138 billion, which itself was revised from the previous -$140.5 billion. The big drop in imports — again, reflecting new tariff realities — appears to have had something of an “Ozempic effect” on the U.S. deficit.

What to Expect from the Stock Market Today

Obviously, we await details on this Trump-Xi phone call. The White House had set a deadline for trade deals this week, and thus far only the outline of an agreement with Great Britain has come to pass. Aside from the tax bill attempting to pass through Congress, there is nothing more potentially significant to the U.S. economy than new trade deals with its global partners.

Otherwise, we see a final surge in quarterly earnings reports. These include chip-maker Broadcom (AVGO Quick QuoteAVGO - Free Report) and specialty apparel retailers lululemon (LULU Quick QuoteLULU - Free Report) and Guess? (GES Quick QuoteGES - Free Report) . Q1 earnings season, as a known entity, is effectively behind us, however. (You can see the full Zacks Earnings Calendar here.)

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