Jobless Claims Up, Retail Continues to Soften
Wednesday, May 8th, 2024
Pre-market futures are down a bit again this morning. We appear to be plateauing a bit this week, following a gallant fight back from near-term lows mid-April. But without heavy impacts from major economic reports or marquee names posting earnings, our sailboat is adrift, ebbing slightly lower. The Dow is down -80 points at this hour, the S&P 500 is -4 and the Nasdaq -6 points. The Dow tries to achieve a seventh-straight positive trading session, although with relatively minuscule gains of late.
Initial Jobless Claims posted higher than expected for the first time in several weeks. A headline of 231K is well ahead of the 214K expected, and even higher than the upwardly revised 209K from the previous week. This level of new jobless claims is the most we’ve seen since 233K back in November of last year, although still a ways from 52-week highs in the 260Ks from June of 2023. Are we headed back to those levels, and is there a measure of seasonality to blame?
Continuing Claims, on the other hand, remained low at 1.785 million. These numbers, reported a week in arrears from initial claims, was still higher than the previous week’s 1.768 million. But anything below 1.8 million — even sub-2 million, really — is consistent with a healthy labor market. One scenario economists foresee that may force the Fed’s hand toward lowering rates without levels of 2% inflation having been reached is if unemployment levels spike. So far, we are not seeing that.
The National Retail Federation (NRF), along with CNBC, is out this morning with a report on consumer spending. Ex-food and energy, April retail spending is down -0.3% month over month, following +0.4% in the prior print. Year over year, this sinks to -0.6% from the previous month, well off the +2.7% this metric was showing just one month ago. Ex-restaurants, consumer retail spending is up +0.4% month over month, double the prior +0.2% print, while we’re still -0.1% year over year, down from the prior +2.9% reported. More clear evidence that the consumer’s appetite for spending, particularly in restaurants, is on the wane.
Videogame producer Roblox RBLX is down big in the pre-market. Following its better-than-expected loss per share of -$0.43 (-$0.53 per share expected) on a top-line miss of $923.8 million ($931.05 million anticipated), Roblox posted much lower revenue guidance for the ongoing quarter: $870-900 million versus $944 million expected, and $4.00-4.10 billion for the full year, down from $4.23 billion in the Zacks consensus. Shares are down -26% ahead of the bell.
Planet Fitness PLNT beat bottom-line estimates this morning. Earnings of 53 cents per share outpaced expectations by 4 cents (and cruised past the 41 cents per share posted a year ago), while revenues of $248.02 million narrowly missed estimates in the quarter. Yet the stock is down another -4.6% this morning, adding to the -15% losses year to date. Taking consumer spending levels into account generally, here is another customer-facing company with retail sales risks. For more on PLNT’s earnings, click here.
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