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Briefing.com Summary:
*NVIDIA delivered another blowout report that has tempered AI bubble concerns.
*The September employment report was not a report for a rate cut in December.
*Jobless claims data reflects a low-firing, low-hiring labor market dynamic.
NVIDIA (NVDA) reported its fiscal Q3 results after the close yesterday. Its stock is up 5.0% in pre-market action. That's a huge move for a company with a $4.5 trillion market capitalization. What it says, in unspoken terms, is that investors were both impressed and relieved by what they heard from the company.
The broader market was, too, and for good reason, and it found added reason to cheer with Walmart (WMT) posting better-than-expected results and guidance as well. WMT is up 3.5%.
Currently, the S&P 500 futures are up 106 points and are trading 1.6% above fair value, the Nasdaq 100 futures are up 507 points and are trading 2.1% above fair value, and the Dow Jones Industrial Average futures are up 455 points and are trading 1.0% above fair value.
NVIDIA came through with another blowout report, exceeding consensus estimates (and whisper estimates by some accounts) and issuing better-than-expected fiscal Q4 revenue guidance with an added clarification from CEO Jensen Huang that "Blackwell sales are off the charts, and cloud GPUs are sold out."
NVIDIA's report might not dispel AI bubble concerns, yet investors are giving credit this morning where credit is due, which is to NVIDIA. Naturally, there is a "halo effect" from NVIDIA's results and guidance that has lifted related stocks and has lifted buy-the-dip spirits in other growth stocks.
Those spirits were not laid to rest again by the September employment report or the latest initial jobless claims report either. The employment report, which is certainly a lagging indicator this time, suggested the labor market was not falling apart in September. In fact, nonfarm payroll gains accelerated to 119,000 after declining by 4,000 in August.
This wasn't an abjectly strong report, nor was it an abjectly weak report. We wouldn't call it "just right" either, not with the uptick in the unemployment rate and the stalling out of average weekly hours worked, but the key takeaway is that this report wouldn't be enough to convince the more hawkish-minded Fed officials to cut rates in December.
Similarly, we don't think the initial jobless claims report—a leading indicator—is either. Initial jobless claims for the week ending November 15 decreased by 8,000 to a lowly 220,000. Continuing jobless claims for the week ending November 8 increased by 28,000 to a not-so-lowly 1.974 million, which is the highest since November 6, 2021.
The key takeaway from the report is that it corroborates the low firing, low hiring narrative hanging over the labor market.
Notable headlines from the September Employment Situation Report:
- September nonfarm payrolls increased by 119,000 (Briefing.com consensus: 50,000). The 3-month average for total nonfarm payrolls increased to 62,000 from 18,000. August nonfarm payrolls revised to -4,000 from 22,000. July nonfarm payrolls revised to 72,000 from 79,000.
- September private sector payrolls increased by 97,000 (Briefing.com consensus: 58,000). August private sector payrolls revised to 18,000 from 38,000. July private sector payrolls revised to 56,000 from 77,000.
- September unemployment rate was 4.4% (Briefing.com consensus: 4.3%) versus 4.3% in August. Persons unemployed for 27 weeks or more accounted for 23.6% of the unemployed versus 25.7% in August. The U6 unemployment rate, which accounts for unemployed and underemployed workers, decreased to 8.0% from 8.1% in August.
- September average hourly earnings were up 0.2% (Briefing.com consensus: 0.3%) versus an upwardly revised 0.4% increase (from 0.3%) in August. Over the last 12 months, average hourly earnings have risen 3.8% versus 3.8% for the 12 months ending in August.
- The average workweek in September was 34.2 hours (Briefing.com consensus: 34.3) versus 34.2 hours in August. Manufacturing workweek changed little at 39.9 hours. Factory overtime was unchanged at 2.9 hours.
- The labor force participation rate increased to 62.4% from 62.3%.
- The employment-population ratio increased to 59.7% from 59.6%.
