Un-spooky Halloween: PCE, Jobless Claims Tame

Thursday, October 31, 2024

Jobs Week trudges along this morning, with Friday morning’s big Employment Situation report now on the horizon. Behind this stands the 2024 General Election — which could obviously sway the balance of executive and legislative branches of the U.S. government — and a new Fed decision on monetary policy a week from today.

Pre-market futures are down at this hour, seemingly unencumbered by this morning’s data reports. The Dow is -160 points currently, the S&P 500 is -30 and the Nasdaq -120 points. Bond yields continue to creep up: +4.28% on the 10-year and +4.127% on the 2-year.

PCE Near Optimum +2% for September

Personal Income for September, one element of the U.S. Bureau of Economic Analysis (BEA), was in-line with expectations at +0.3%, up 10 basis points (bps) from the previous month. This is the first of several in-line metrics greeting us in today’s Personal Consumption Expenditures (PCE) report.

Personal Spending, on the other hand, was 10 bps higher than anticipated to +0.5%, a big jump from the previous +0.2%, and the highest since +0.5% since March. Real Spending was also warmer than expected at +0.4%. These numbers are good for the overall economy, but perhaps not so much for American savings accounts.

PCE Index month over month was +0.2%, in-line with estimates and 10 bps higher than the last peek. In fact, we haven’t been this high on this measure since April. Year over year PCE Index is +2.1%, down from the +2.2% posted a month ago and nearly in-line with the Red’s optimum inflation rate of +2.0%.

Core PCE clears out a bit of the noise from volatile aspects of these numbers. Month over month, core PCE reached +0.3% — in-line with expectations and the warmest we’ve seen since March of this year. Year over year, this bumps up 10 bps to +2.7%, equalling the previous month.

Mostly when we look at this data, we concern ourselves with big moves in one direction or the other. We don’t see this here. In fact, it’s hard to wish for a more in-line PCE report, especially considering it’s the preferred print on inflation for the Fed.

Weekly Jobless Claims Moderate

Last Thursday morning, we saw big jumps in both new and longer-term jobless claims. Thus, we were looking to see whether things would cool down this week or continue to heat up.

We got the former, thankfully — but with an asterisk*. Initial Jobless Claims of 216K is notably lower than the 230K analysts were looking for, and -8K below the previous week’s upwardly revised 228K. 

* However, two hurricanes in Florida over the past month may be muting jobless claims data, or physically applying for unemployment assistance may be slightly down the to-do list for storm victims. We’ll reserve judgment until all the data comes in.

Continuing Jobless Claims came in at 1.862 million, nicely below the downwardly revised 1.888 million from the previous week. Jobless claims look to have 1.9 million — and then 2 million — in their sites, but are thankfully taking their time getting there.

Neither the Jobless Claims not PCE numbers suggest that the Fed will see the current U.S. economy in dire shape. Thus, the debate whether two more 25 bps interest rate cuts will greet us before the end of the year shall continue. Tomorrow’s non-farm payrolls has the potential to speak louder than any economic metrics we’ve seen thus far this week.

Q3 Earnings Season Rolls Along

After the close, we have another big afternoon of earnings reports, including Apple (AAPL Quick QuoteAAPL - Free Report) , Amazon (AMZN Quick QuoteAMZN - Free Report) , Intel (INTC Quick QuoteINTC - Free Report) and others. This morning, a couple of the many reports have grabbed our attention:

Bristol Myers-Squibb (BMY Quick QuoteBMY - Free Report) posted a +21% positive earnings surprise, with $1.80 per share well ahead of the $1.49 forecast. Revenues of $11.89 billion topped the Zacks consensus by +5%. For more on BMY’s earnings, click here.

Check out the updated Zacks Earnings Calendar here.

International Paper (IP Quick QuoteIP - Free Report) , a Zacks Rank #2 (Buy) ahead of this morning’s earnings release, put up a sweet +83% positive surprise to earnings of 44 cents per share in the quarter. Revenues were a more modest beat, to $4.69 billion, but clearly ahead of the $4.61 billion reported a year ago. For more on IP’s earnings, click here.

SIRIUS XM (SIRI Quick QuoteSIRI - Free Report) , however, posted a surprise earnings miss of -212%. This was based on a huge one-time non-cash impairment charge, although revenues also missed estimates slightly to $2.17 billion. This breaks the earnings-beat streak of seven straight quarters. 

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