Our cavalcade of surprises continues, as in just a few weeks financial markets will be unseated reacting to key economic indicators and corporate earnings reports. Investors are looking forward to this Friday’s Non-Farm Payroll (NFP) report, similar to something like Christmas coming early. The analysts are looking for a gain of 138,000 new jobs in the NFP. They forecast that the unemployment rate will remain unchanged at 4.2%. This report, scheduled for release at 8:30 AM, is pivotal in gauging the health of the U.S. labor market and will likely influence investor sentiment.
The NFP release comes on the heels of a bad ADP employment report. That’s raised alarms about the impact on private sector job growth. Average hourly earnings are forecast to rise 0.3% m/m. Compared with one year ago, they ought to be up 3.9%, reflecting the slow return of robust wage growth as the economy gets back on its feet.
Chevron’s recent quarterly report shows that the oil giant is in a very strong financial position, with net cash of $153 billion sitting on its balance sheet. While the economic climate remains uncertain, this strong cash reserve puts the company in an enviable position. A recurrence of this dilemma can be found in the energy sector as it continues to adjust through pandemic-induced oil price declines and global demand shifts.
Durable Goods report shows huge violent 9.2% surge. Indeed, this recent surge is a testament to both the pent-up demand for durable goods in the revitalizing U.S. economy and the ongoing positive economic narrative. Factory orders are expected to increase by 4.5%, indicating more strength in the manufacturing sector. All of these numbers point to a surprisingly strong industrial sector that has the potential to lift the entire economy.
On the corporate side, tech behemoths Apple and Amazon have both posted quarterly earnings above Wall Street estimates. Apple reported stellar earnings per share (EPS) of $1.65, beating Wall Street estimates of $1.63. Further, the company’s revenues reached $95.4 billion, better than predictions of $94.6 billion. Amazon’s EPS was $1.59, beating the expected $1.36. Companywide adjusted revenues came in at $155.6 billion, just above Wall Street’s targets of $155 billion.
As these corporate earnings await to play out, European markets have opened strongly higher on Monday, bolstered by strong corporate sentiment stemming from notable U.S. earnings reports. Eurozone inflation remained at 2.2%. It was France that drove the regional growth with a 1.7% increase, with Spain a close second at 0.7%. This dependable inflation environment could provide clues about the European Central Bank’s forthcoming monetary policy trajectory in the short term.