Editorial StaffStocks higher ahead of October jobs report; Payrolls may rise by 450,000, but wages gains likely to move markets; Peloton plunges after slashing 2022 revenue forecast; Uber posts its first-ever profit and House lawmakers will vote Friday on a $1.75 trillion economic stimulus package.
1. — Stocks Futures Nudge Higher Ahead of October Payrolls
U.S. equity futures moved higher again Friday, with tech stocks set to add to their recent slate of record highs, as investors add risk in the wake of the Federal Reserve’s dovish take on rates and tapering ahead of today’s October jobs report.
Both the Nasdaq and the S&P 500 extended their run of record highs to six consecutive sessions last night, powered by solid gains in the semiconductor sector and broader moves north for tech stocks as benchmark 10-year note yields retreated to 1.52% following Fed Chair Jerome Powell’s pledge to be “patient” when it comes to future rates hikes.
Focus shifts Friday, however, to the October payroll reading, with economists looking for a topline addition of 450,000 net new jobs and a headline unemployment rate of 4.7%
Futures contracts tied to the Dow Jones Industrial Average are indicating a modest 20 point opening gain while those linked to the S&P 500 are priced for a 10 point move to the upside. Futures tied to the tech-focused Nasdaq Composite are indicating a 70 point gain from last night’s record close.
2. — October Job Gains in Focus, But Wages May Be Key to Market Reaction
The U.S. economy likely added around 450,00 net jobs last month, according to Street forecasts heading into today’s October non-farm payroll report, as unemployment benefits expired and companies ramped-up hiring for the holiday season.
What may prove more troubling for both the Federal Reserve, however, is the fact that gains of around 500,000 likely won’t constitute evidence of a ‘substantial rebound’ in labor force participation, indicating slower-than-expected employment growth, although wages may continue to accelerate as companies entice workers with overtime, bonuses and added benefits amid one of the most severe shortages on record.
Average hourly earnings are expected to rise by 0.4%, but reports of hiring pushes from some of the country’s biggest companies, as well as ongoing industrial act companies like Deere & Co. DE and Kellogg K, could lift that figure even higher, stoking an already-sear set of inflation figures heading into the final two months of the year.
3. — Peloton Shares Plunge As Pandemic Demand Evaporates
Peloton (PTON) – Get Peloton Interactive, Inc. Class A Report shares plunged in pre-market trading Friday after it slashed its 2022 sales forecast amid a slump in post-pandemic demand for its home fitness equipment.
Peloton post a net loss of $376 million for its fiscal first quarter, which ended in September, amid the slowest sales growth in more than a year and said 2022 revenues would likely come in between $4.4 billion and $4.8 billion, a $1 billion reduction from its prior forecast.
“Our baseline traffic forecast reflected our unchanged view of the growing consumer interest in Connected Fitness, our growing market share in the category, our leading brand awareness and expected increased word-of-mouth,” CFO Jill Woodworth told investors on a conference call late Thursday. “However, it is clear that we underestimated the reopening impact on our company and the overall industry.”
Peloton shares were marked 32.8% lower in pre-market trading Friday to indicate and opening bell price of $57.98 each.
4. — Uber Posts First-Ever Profit, Issues Cautious Outlook
Uber Technologies (UBER) – Get Uber Technologies, Inc. Report shares edged lower in pre-market trading after the ride-hailing group posted its first operating profit as a public company as passenger traffic increased and costs linked to adding new drivers stabilized.
Uber said its adjusted profit for the three months ending in September came in at a modest $8 million, enough to put it in the black for the first time. A writedown of its stake in China-based Didi put the net loss at $2.4 billion, however, and a tepid fourth quarter forecast kept shares in the red in extended hours trading.
“Our monthly active driver and courier base in the US has grown by nearly 640,000 since January,” CEO Dara Khosrowshahi told investors on a conference call late Thursday. “Against a backdrop of historic labor shortages and an abundance of choice for workers is a strong endorsement of Uber’s value and the value of independent, flexible work.”
Uber share were marked 2% lower in pre-market trading to indicate an opening bell price of $44.40 each.
5. — House Set For Friday Vote on $1.75 Trillion Stimulus Bill
House lawmakers will vote Friday to approve a $1.75 trillion stimulus package, as well as a separate $1 trillion infrastructure bill, as Democrats look to salvage the cornerstone of President Joe Biden’s economic agenda following months of in-fighting.
Biden, in fact, was said to have called various House members personally last night from the COP26 Summit in Scotland, urging them to pass the twin spending efforts following a disappointing set of elections losses earlier this week.
“The Build Back Better legislation presents a historic opportunity to make investments that will cut costs for families, create good jobs, and increase economic growth for the long term,’ Treasury Secretary Janet Yellen said in a statement late Thursday. “The investments and revenue provisions of the Build Back Better package would raise over $2 trillion in offsets, making the entire package paid for over ten years and would reduce deficits over the long term.”
Senate Leaders Chuck Schumer has said he wants to put the bills to a floor vote — where Democrats hold a narrow majority over their Republican rivals — before Thanksgiving.
Source: The Street
