Ahead of Wall Street - May 3, 2012 - Ahead of Wall Street
03 May 2012 - 7:04PM
Zacks
Thursday, May 3, 2012
Of today’s busy economic calendar, the Jobless Claims data
lessened some of the anxieties that had started building up in
recent weeks indicating that the labor market might be losing
momentum. Wednesday’s disappointing ADP report appeared to be along
the lines of the March jobs miss from the Bureau of Labor
Statistics (BLS). We will know for sure tomorrow morning as the
April BLS numbers come out whether it was Wednesday’s ADP report or
this morning’s Jobless Claims reading that better reflected
developments in the labor market.
In other economic reports, we got a better looking non-farm
productivity report for the first quarter, with the fall in
productivity and rise in unit labor costs coming in less the
expected. The April non-manufacturing ISM report coming out a
little later is expected to be essentially flat from the prior
month’s level. The headlines out of Europe this morning also appear
to be less troubling, with the European Central Bank (ECB) doing
the expected of leaving interest rates unchanged and a couple of
decent looking bond auctions in Spain and France.
But given the focus on the labor market ahead of Friday’s non-farm
payroll report from the BLS, this morning’s better than expected
initial Jobless Claims will be rightly considered as the best news
of the day. Reversing the trend of recent of recent weeks, initial
Jobless Claims dropped a bigger than expected 27K last week to
365K, while the 4-week average dropped by 750 to 383.5K.
This is the biggest drop in claims in months and will likely revive
the claim that the recent softness in the labor market was likely
due to seasonality issues. We will get a better measure of the
labor market in tomorrow’s BLS report, but this Jobless Claims
reading nevertheless goes some way to bring down the anxieties that
rose after Wednesday’s ADP surprise.
On the earnings front, we got better than expected results from
General Motors (GM) as North American strength
offset European weakness, a trend that we have seen repeatedly this
reporting cycle. Viacom (VIA.B) also came ahead of
earnings expectations on in-line top-line results. Sara
Lee (SLE), which is in the process of spinning off its
coffee and tea business missed expectations, though the company
appears on track to divest the business by the end of the current
quarter.
Sheraz Mian
Director of Research
GENERAL MOTORS (GM): Free Stock Analysis Report
SARA LEE (SLE): Free Stock Analysis Report
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