On the domestic economic front, we got better-than-expected Jobless Claims numbers this morning. Weekly Jobless Claims dropped 7 thousand for the week to 395 thousand. The relatively more stable 4-week average dropped by 3.2 thousand last week to 405 thousand. The drop in the claims level to under-400 thousand is a net positive, though I would caution that these weekly numbers are prone to revisions in the subsequent weeks.
But notwithstanding the level of claims in this week, the overall trend over the last few weeks is clearly in the positive direction. Let’s not forget that jobless claims were as high as 478 thousand in April. The claims level has remained at or above the key 400 thousand level for more than four months, but the trend in recent weeks has been to the downside. If this trend is sustained in the coming weeks, it will be a major improvement in the macro picture.
This would be inline with the positive development we saw in the monthly non-farm payroll report for July, when more than 150 thousand private sector jobs were created. Other labor market indicators, such as the employment components of the ISM indexes and the ADP report, are also showing positive gains. None of these reports are strong enough to bring down the unemployment rate, but they are not indicating the onset of a fresh recessionary downturn either.
On the earnings front, we had Cisco (CSCO) come ahead of top- and bottom-line expectations after the market close on Wednesday. The networking giant appears to be making steady progress in bringing its cost base under control. We had Sara Lee (SLE) come out with better-than-expected results this morning, but they guided lower. In market trivia, Apple (AAPL) appears to have finally edged past Exxon (XOM) to become the company with the largest market capitalization.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment