PCE Numbers Come in Line With Expectations
Pre-market futures improved on this morning’s big economic report ahead of the opening bell: Personal Consumption Expenditures (PCE) for the month of September. This is the key metric the Fed uses to determine interest rate levels — increasingly important with a new Federal Open Market Committee (FOMC) meeting mid-next week. We also see fresh Q3 earnings data from market-leading companies, as earnings season rolls through its busiest period.
Income on September PCE came in a tad below expectations — +0.3% versus +0.4% estimated and recorded the previous month. Spending, however, continued to climb — +0.7% compared with the +0.5% anticipated and the +0.4% posted a month ago. This trends alongside other data we’ve seen: consumers continue to spend, even as their income levels are coming down a bit. It makes sense, too — PCE data pulls from other economic metrics, which makes it the Fed’s preferred numbers.
The PCE index month over month reached +0.4%, while core (subtracting volatile food and energy costs) came in at +0.3% — both in-line with expectations; core is up 20 basis points (bps) from the previous month, while headline index is flat. Year over year PCE reached +3.4% — a nice move lower from the +3.7% expected and +3.9% reported for August. Year over year PCE core came in at +3.7% — below the +3.8% from a month ago and the lowest monthly print since early 2021. This ought to get the Fed’s attention, in a good way.
For sure, pre-market futures flipped from -40 points on the Dow to +5 points initially following these results. The S&P 500 moved up from +10 points to +18, while the Nasdaq was +90 points and moved to +120. That said, bond yields on the 2-year and 10-year have ticked up a tad, as well, which may have a downward pull on pre-market levels.
ExxonMobil XOM provided a mixed Q3 picture this morning, missing estimates on the bottom line while coming in slightly ahead on the top. Earnings of $2.27 per share was below the Zacks consensus $2.36 (and the $4.45 per share reported in the year-over-year quarter), for an earnings miss of -3.8% and the second quarterly earnings miss in a row. Revenues, however, came in +1.65% from expectations to $90.76 billion. Yet shares, down -2% year to date, are up slightly in today’s pre-market.
Exxon competitor (on the midstream side, anyway) Phillips 66 PSX also missed on earnings but beat on quarterly sales. Reporting $4.63 per share missed the Zacks consensus by 15 cents (and well below the $6.46 per share from a year ago), but revenues of $40.32 billion in the quarter surpassed the $35.23 billion expected (beneath the $48.76 billion a year ago). The stock, +9% year to date, is up +0.8% in early trading.
Colgate-Palmolive CL beat estimates on both top and bottom lines in its Q3 report this morning, with earnings of 86 cents per share versus 80 cents for the Zacks consensus (and up from the 74 cents per share a year ago). This makes the third earnings beat in the past four quarters. Revenues of $4.92 billion notched a +2% beat (and higher than $4.46 billion in Q3 2022). Shares are still down single-digits year-to-date but are +1% on the earnings news.
After today’s open, Consumer Sentiment for October is expected to come in even from the previous month at 63.0, while the Nasdaq and S&P 500 bask in the strong earnings report yesterday afternoon from Amazon AMZN, which posted a 40%+ beat on its bottom line and higher quarterly sales than expected. Amazon is +5.5% ahead of today’s open.
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