Initial Claims More Than Expectations

Yahoo

01-05-2025

Pre-market futures are up this morning, though somewhat muted from levels prior to economic reports out this morning on unemployment claims. We also see a full compliment of Q1 earnings reports ahead of today's opening bell, with another couple 'Mag 7' companies due to report after today's close.
For months, we've been talking in this space about the steadiness and resiliency of weekly unemployment claims. While other metrics on the economy and employment have begun to show some volatility of late, these Thursday morning releases have for the most part kept a ceiling of 225K on near-term claims and sub-1.9 million on longer-term claims. That changes this morning, on both counts.Last week, 241K Americans filed for unemployment on Initial Jobless Claims, well north of the 225K analysts were expecting and slightly upwardly revised 223K for the previous week. This level north of 240K was last reached back in the third week of February this year, which stands as an outlier relative to weeks on either side. Perhaps that will be the case here, as well. Future weeks will let us know.Continuing Claims breached 1.9 million for the first time in several weeks: 1.916 million were filed two weeks ago (longer-term claims report a week in arrears from new claims), the highest level (for now) since November 2021. But we have been here before: previous weeks this year have initially sounded the 1.9 million gong, only to revised it back down to the high 1.8 million level the following week. Again, we need to wait to see in future weeks whether this gets taken back below that threshold or start developing signs of labor market weakness.
Big Pharma staple Eli Lilly LLY posted mixed results ahead of today's open, missing on earnings — $3.34 per share versus $3.52 expected, for a negative surprise of -5% — while beating on revenues: $12.73 billion, +0.8% from projections and well ahead of last year's $8.77 billion reported. Sales on weight-loss drug Mounjaro surged to $3.84 billion in the quarter. However, while forward revenue guidance was kept intact, LLY shares are down -4.7% on the news this morning.McDonald's MCD was also mixed in its Q1 report ahead of today's open, with earnings of $2.67 per share advancing past the Zacks consensus by 3 cents on revenues of $5.96 billion, which missed expectations by -2.12%. Same-store sales fell to their lowest levels in 5 years (the dreaded 'Covid era') and shares had been down -2% on the news. This cuts into the company's +10% gains year to date.CVS Health CVS, which has re-prioritized its business away from expensive brick-and-mortar shops, posted a big Q1 earnings beat this morning: $2.25 per share versus $1.71 anticipated, for a +31.6% quarterly beat. Revenues of $94.59 billion in the period outpaced estimates by +1.76%. CVS is quietly one of the big success stories in 2025: shares are up another +8.7% at this hour, adding to its +48% gains year to date.Perhaps no company this morning posted a bigger upside surprise than home goods supply firm Wayfair W, which swung to a positive +$0.10 per share on earnings from -$0.18 expected, for a surprise of +155%. Revenues of $2.73 billion for the quarter was +0.70% ahead of estimates, and exactly in-line with the previous month. Shares are up +6% in early trading; it still has a ways to go before it makes back the -32% in losses, year to date. For more on W's earnings, click here.
Once regular trading opens for business this morning, we'll await the final print on S&P Manufacturing PMI and ISM Manufacturing, both for April. The S&P print looks to dial back narrowly to 50.6 — importantly, still above the 50-threshold that determines gain from loss. ISM Manufacturing, however, is expected to recess deeper into that sub-50 mire: 47.8% in the consensus estimate; 49.0% was the headline last time around.Construction Spending results for March will also be in the offing a little later this morning. These are expected to drop half a percentage point month over month — from +0.7% for February to +0.2% the following month. These data sets look into the past a bit; we expect metrics like these to experience bigger changes as current trade policy in the U.S. comes under heavier consideration.After today's closing bell, we'll hear from Amazon AMZN and — a half-hour after the normal session ends — Apple AAPL on Q1 earnings results. These are the two 'Mag 7' stocks we referred to earlier. Elsewhere, this afternoon also brings us Mastercard MA, Amgen AMGN and Twilio TWLO earnings after the bell, among many others.
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