Market Awaits July Nonfarm Payrolls Report
Ahead of today's July nonfarm payrolls report, conflicting employment data in recent days has painted an unclear picture of the U.S. jobs market.
Wednesday's release from ADP and Moody's Analytics showed private payrolls increased by 167,000 in July, well below the estimate of one million jobs created. Payrolls growth was seen at companies with fewer than 50 employees and large companies, while businesses with between 50 and 499 employees saw a decline of 25,000 jobs. June's total was revised higher but still barely puts a dent in the nearly 20 million jobs lost in March and April.
"The labor market recovery slowed in the month of July," co-head of the ADP Research Institute Ahu Yildirmaz said. "We have seen the slowdown impact businesses across all sizes and sectors."
Yesterday saw two other employment reports released sending mixed messages.
Initial jobless claims totaled 1.186 million last week, marking the lowest total since the coronavirus halted the U.S. economy, according to the U.S. Department of Labor. While it marks the lowest total in recent months, jobless claims are still firmly above one million for the 20th-consecutive week. Prior to the coronavirus pandemic, the single month record was 695,000 in 1982.
Continuing claims also remain elevated. Continuing claims, which are those who have collected benefits for two straight weeks, dropped by 844,000 to 16.1 million.
Also yesterday, Challenger, Gray & Christmas released a report showing layoffs increased by 54% in July from the previous month. Layoffs by U.S. employers totaled 262,649 in July compared to 246,507 employees being hired. July's job cuts marked the third-highest monthly total since the coronavirus began.
"The downturn is far from over, especially as COVID cases rise around the country," Challenger, Gray & Christmas senior vice president Andrew Challenger said. "Consumers are buying fewer goods and services, businesses are closing, and bankruptcies are rising."
COVID-19 was named as the reason for just over 50% of the job cuts in July, according to Challenger, Gray & Christmas. The remainder were attributed to market conditions, a downturn in demand and bankruptcies.
"It is clear that many job losses are now permanent, and it will be challenging for many workers to find new jobs and feel safe taking jobs that are public-facing," Challenger said.
With employment data over the last few days painting a mixed picture, it's clear that the jobs market has a long way to go to recover all of the jobs lost since the pandemic began.
Looking for a new way to take control of your portfolio?
Invest smarter with Atom Finance. Atom is a free investment research platform that gives you the power and insight of institutional quality research tools, minus the ~$20k a year price tag.
With Atom, you get so much more than data. You can create a customized research experience that includes news, analysis, collaboration, and modeling tools.
Want to track your aggregate investments and monitor real-time stats? Use the Portfolio feature to securely link multiple brokerage accounts.
Want to stay ahead of earnings? Check out historical financials, upcoming events, or set up a Hub (available on desktop and coming soon to the app), where you can screen for stocks or create watchlists to compare analyst expectations for the quarter.
Want to know what’s moving the markets? Receive intra-day market briefings, chat with fellow investors, or set up alerts for the stocks you follow so you’ll always stay up to date.
Try Atom Finance free today at atom.finance or download the Atom Finance app on iOS and Android.
Rocket IPOs. Quicken Loans parent Rocket Companies jumped nearly 20% in its IPO yesterday after raising $1.8 billion in its downsized IPO. The IPO priced 100 million shares at $18 per share after initially planning to sell 150 million shares at a target range of $20 to $22 per share, which would've made it the largest U.S. IPO of the year. At $18 per share, Rocket is valued at $36 billion, making it the third-largest U.S. IPO this year. It appears Rocket had a difficult time persuading investors it deserves a technology valuation for its mortgage lending businesses rather than a traditional financial services valuation.
New York proposes antitrust bill. Lawmakers in New York have proposed a new bill that would make it easier to sue companies for antitrust violations. Under the current law, action can't be taken against companies unless the two are collaborating and conspiring to stifle competition. "Our antitrust laws are about a century old and were built for a different economy," the bill's sponsor Senator Michael Gianaris said. "In some ways, what we're trying to do is match what the federal government has the power to do."
Epic Games lands $17.3 billion valuation. Fortnite creator Epic Games has raised $1.78 billion in funding at a valuation of $17.3 billion. The funding round includes a previously announced $250 million investment from Sony. Epic Games founder and CEO Tim Sweeney will retain control of the company following the capital raise. Hedge fund manager David Tepper is among the notable investors who participated in the funding round.
Hotel comeback will take a while. Hilton Worldwide Holdings said hotel demand won't recover to pre-coronavirus levels until 2022. Hilton said occupancy rates in the U.S. increased by 20% between April and June. "I think about the shape of the recovery so far, which has gone from a low of a little over 10% to now running 45% and moving our way up to 50%," Hilton CEO Christopher Nassetta said. "That is a lot of improvement over a relatively short period of time."
CalPERS CIO abruptly resigns. CalPERS chief investment officer Ben Meng has resigned from his position effective immediately after just 18 months in the position. CalPERS has come under fire as of late for increasing its leverage and trimming its hedges right before the market collapsed earlier this year. Meng will be replaced by deputy chief investment officer Dan Bienvenue until CalPERS finds a permanent replacement. "I'm proud of the work we did to change the portfolio, build a skilled Investment Office, and set CalPERS on a strong path to achieve our return target," Meng said. "But at this time, it's important for me to focus on my health and on my family and move on to the next chapter in my life."