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Jobless Claims, Walmart Q1 Stay Healthy (revised)

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Thursday, May 17, 2018

Initial Jobless Claims from last week were again released before the bell this Thursday, as they do every Thursday. And even though the week-over-week headline rose by 11,000 claims, the total of 222K is still within an historically very healthy range. For more than a year, we’d seen a strong labor market range for claims between 225-250K, but for the last month or so, we’ve actually been within a 200-225K range for new jobless claims.

This is, actually, quite an incredible number — especially considering from whence we came. For years following the Great Recession implosion, when the U.S. labor market was hemorrhaging more than a quarter-million jobs per MONTH, once traction toward jobs gains was established, claims were still sky-high. Here at Zacks, we looked forward to the day when, based on trajectories we were studying at the time, we could bring claims to the sub-300K range and stay there. Then we’d start to see real economic progress.

And look where we are now — historic jobless claims numbers. Continuing Claims have naturally followed suit, posting this morning another multi-year low at 1.707 million. Even though it hasn’t been very long ago that we were seeing continuing claims totaling more than 2 million per week, those days also look well in the rear-view mirror these days.

Any self-styled economist could tell you that with jobless claims numbers like these — as well as a current unemployment rate below 4% for the first time in 20 years or so — consumer confidence was going to benefit, especially on the lower rungs of the pay scale (the super-wealthy never really have to worry about their purchasing power). Thus, we see an opportune moment for Walmart (WMT - Free Report) Q1 2019 earnings results ahead of the opening bell, and the numbers were quite good.

Walmart’s earnings pre-figure a one-time charge that is calculated to benefit the world’s largest retailer, and that is the 77% stake in Flipkart the company took during the quarter. Flipkart is known as the Amazon of India, and as such looks to greatly expand Walmart’s ecommerce presence on a worldwide scale. However, assuming the deal is finalized, the impact on WMT stock won't be felt til the company's Q2 earnings report.

The headline earnings figure of $1.14 beat the Zacks consensus by 2 cents. Revenues also surpassed expectations, putting up $122.7 billion as opposed to the $120 billion expected, and up 4.4% year over year.

Considering the strong U.S. consumer confidence a moment, U.S. sales rose more than 3% year over year. Ecommerce sales domestically rose 1% from the same quarter a year ago. Shares are up roughly 1.7% in today’s pre-market; they are still off the all-time highs experienced earlier this year, but up around 3% over the past week. For more on WMT’s earnings, click here.

Mark Vickery
Senior Editor

(NOTE: We are reissuing this article to correct a mistake. The original version, released earlier today, Thursday, May 17, 2018, should no longer be relied upon.)

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