What You Need to Know about Today's Earnings and Economic Reports

If you’ve been keeping up with the blog, you’ll know that Wall Street is living and breathing earnings announcements right now. And this morning, several major grocery and convenience store chains are front and center on the earnings stage:

  • Safeway Inc.‘s (SWY) third-quarter profits rose 15.7% year-over-year, but shares opened down on news that quarterly sales retreated 0.2% to $10.05 billion—below the $10.24 consensus estimate.
  • France’sCarrefour SA(CA) gained ground after it posted 2.1% sales growth thanks to its growing presence in Latin America—this offset flagging growth in Southern Europe.
  • Susser Holdings Corp.(SUSS), which operates hundreds of Stripes convenience stores across the South and Midwest, unveiled higher expectations for third-quarter same-store sales growth. The company now expects 5.8% merchandise sales growth and 6.6% fuel sales growth at its gas stations.

As important as earnings season is, we also received some important updates on the U.S. economy, so today I’m going to run down the details.

Jobless Claims Plunge—A Good Sign For U.S. Jobs

Beyond a doubt, the most shocking news was that last week’s initial claims for unemployment plunged 30,000 to 339,000—the lowest level in more than four years. Initial claims, or jobless claims, details how many people are filing for state jobless benefits, so the lower the number, the better. A reading below 400,000 indicates a growing jobs market, and the weekly figures have remained below this benchmark for the past several months. On top of this, the more stable four-week moving average dropped 11,500 to 364,000—the lowest level in a half year. Considering that we have seen usually low jobless claims figures for the past three weeks, this could be the start of a positive trend for the jobs market.

Trade Gap Widens

In August, the U.S. imported $44.2 billion more goods than it exported—the trade deficit widened from $42.5 billion in July. This was driven by a 1% drop in U.S. exports—in particular, the U.S. sold far fewer industrial goods and petroleum products abroad. Meanwhile, imports also slipped 0.1% thanks to fewer purchases of automobiles and capital goods. Finally, import prices rose 0.6% year-over-year and 1.1% month-over-month. So it’s clear that there are some inflationary pressures built into imports right now.

Looking Ahead: PPI

Speaking of inflation, tomorrow, the Labor Department will release its Producer Price Index (PPI) figures for September. As a refresher, PPI measures the price of goods at the wholesale level—together with the Consumer Price Index, these two indices give us a good sense of what kind of inflationary environment we’re dealing with. As it stands, economists predict that PPI grew 0.5% in September, representing a slowdown from the 1.7% gain in August. But, when food and energy prices are excluded (this “core” measure is less volatile and considered a better gauge of producer prices), economists are calling for just a 0.1% gain.

I’ll check in tomorrow if there is any market moving news on this front—as well as keep you updated on the latest earnings winners (and losers).

Until then,

Louis Navellier

Louis Navellier

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