Strong Economic Data

Initial Jobless Claims remained very strong, indicating continued robust domestic employment: 216K new claims last week is in the middle of the 200-225K range we’ve seen over the past few years. This is higher than the downwardly revised 208K from the previous week, and lower than the 220K expected.

Continuing Claims dipped below 1.7 million again to 1.686 million, again consistent with an historically strong labor market. Clearly, if we are to have an interest rate cut at the end of this month by voting members of the Federal Reserve, employment concerns are not to be held responsible.

The Philly Fed survey, as we saw with Empire State numbers earlier, have rebounded nicely to a 21.8 print in July, from an initially reported +0.3 last month and a +3.9 read expected. The last time we saw this big a jump in Philly Fed was exactly one year ago. These indexes do tend to carry some volatility month to month, but it would appear regional production is not necessitating an interest rate hike, either.

Q2 Earnings Update

Morgan Stanley MS topped estimates on both top and bottom lines in its Q2 report this morning: $1.23 per share beat the Zacks consensus by a solid dime (though down from the $1.30 per share in the year-ago quarter) on revenues of $10.24 billion which outpaced estimates by 2.63% (versus $10.61 billion in Q2 2108). This marks three of the last four quarters Morgan Stanley has posted an earnings beat. 

 Regional bank BB&T BBT also outperformed on earnings and revenues ahead of today’s opening bell, with $1.12 per share beating by 4 cents and $3.04 billion bettering the expected $2.98 billion. BB&T has not posted a negative earnings surprise since Q4 2015, though has beat estimates by an average of 1.5% over the trailing four quarters. 

UnitedHealthcare UNH easily surpassed expectations on its bottom line — $3.60 per share versus $3.46 analysts were looking for, and well above the $3.14 in the year-ago quarter — on $60.60 billion in revenues, which missed estimates by 0.12%, and are up from $56.09 billion a year ago. Shares are up marginally on the news, though have only grown 7% year to date (compared to 19% for the S&P 500). UnitedHealth has missed no earnings estimates in the last five years. 

Railroad major Union Pacific UNP also put up a 10-cent beat on its Q2 earnings to $2.22 per share, on $5.60 billion in revenues that surpassed estimates by 0.35% (though down from $5.67 billion in the year-ago quarter). The company has traded basically in-line with the S&P 500 year to date, up 19%. Shares are up more than 3% on this morning’s earnings news so far in pre-market trading.

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