We begin a new trading day, in what has so far been a successful trading week, seeing the
European Central Bank (ECB)
raising interest rates for the first time in 11 years. This is the EU’s attempt to catch up to the U.S., Canada and Great Britain in tightening monetary policy in the wake of inflation climbing across the globe.
The ECB had been expected to make this move since ECB President Christine Lagarde signaled tightening was in the forecast, but today’s 50 basis-point (bps) hike wasn’t much considered by analysts until very recently, when bigger moves appeared necessary to keep up with its Western allies. Further, the ECB expected “further normalization” to come in following ECB meetings.
Initial Jobless Claims
cracked a psychologically unpleasant milestone this morning, posting 251K new claims last week which mark the highest rate since November 2020. New claims’ four-week moving average swooped up 4500 in just one week, to 240,500. This is a clear sign that the historically robust labor market in the U.S. is beginning to shed some employment, at least on the near term.
Continuing Claims
also rose significantly, +51K week over week to 1.384 million — the highest level since the week of April 27th. And because longer-term jobless claims report a week in arrears from initial claims, we may expect these figures to move higher next week as well. That said, sub-1.4 million on longer-term jobless claims is still historically low, and even higher new claims may not result in extended unemployment, especially with so many job openings in the U.S. currently.
The
Philly Fed survey
for July notched its fourth-straight down month, posting -12.3 from an expected +1.6 and the previous month’s -3.3. This is the lowest read we’ve seen on Philadelphia manufacturing since May 2020 — the early segment of the pandemic. In the report, 24% of survey respondents reported activity decreases, twice as many as reported increases.
In Q2 earnings results,
AT&T
(
T
) managed to beat expectations on both top and bottom lines: earnings of 65 cents per share outpaced the Zacks consensus by 5 cents, while revenues of $29.6 billion rose past the expected $29.3 billion. Yet shares are trading down -5% in today’s pre-market, as the company reported a big cash-flow miss from expectations. Shares are still positive year to date.
American Airlines
(
AAL
) posted mixed Q2 results this morning, with earnings of 76 per share missing estimates by 3 cents on $13.42 billion in sales, which marginally topped Zacks consensus estimates. Shares have slid -3% on the news, and are down -15% year to date so far.
Homebuilder
D.R. Horton
(
DHI
) was also mixed in its fiscal Q3 earnings report ahead of the bell, with earnings per share of $4.67 beating consensus by +3.55% while revenues of $8.79 billion missed expectations by -1.3%. Shares are down marginally in early trading, but the stock is -33% year to date.
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