Trader Talk

Cautious Hope for US Jobs


Bob Pisani is off; this post was written by CNBC producer Robert Hum.

S&P futures rose 5 points Wednesday following a better-than-expected ADP employment report. The firm reported a slightly better-than-expected gain of 42,000 private sector jobs (vs. up 39,000 expected) in July, giving hope of a better government July jobs report on Friday.

Economic data overseas was a bit more mundane, however. European markets are slightly lower after lackluster PMI purchasing managers index readings in the U.K. and across the Eurozone. UK PMI disappointed, falling unexpectedly to 53.1 from 54.4 in July to its lowest level in over a year. Additionally, Eurozone PMI came in at 55.8, slightly shy of the estimate of 56.

More signs of slowing growth in China: The State Information Center in China revealed that it expects the country’s GDP will rise an annualized 9.2 percent in the third quarter, down from 10.3 percent last quarter and 11.9 percent in the first quarter.

Meanwhile, traders have their eyes on the dollar again as it sits at a 3-month low vs. the euro and a 1-month low vs. the pound. More significantly, it is approaching its November low vs. the yen, and would hit a 15-year low if it falls below that level.

Some glimmers of hope today in a few of the latest batch of earnings reports:

1) CBS beat estimates ($0.25 vs. $0.21 consensus) as revenues grew across all of its media divisions (local broadcasting up 17 percent, cable networks up 12 percent, entertainment up 10 percent). Ad markets rebounded notably as ad sales rose 9 percent, led by a strong 17 percent jump in local advertising sales.

CEO Les Moonves provides some optimism over the ad environment ahead saying, “the very healthy ad sales pacing we're seeing today indicates that the recovery is continuing, and we expect a significant lift in political advertising around the November elections.”

2) Time Warner beat estimates ($0.50 vs. $0.45 consensus) as revenues grew a greater-than-expected 8 percent. The media company saw stronger film revenues (up 8 percent) and also saw advertising sales rise 11 percent. Looking ahead, guidance for the year was raised, with earnings seen growing at least 20 percent (Street consensus is up 21 percent).

3) Anadarko Q2 earnings beat estimates ($0.49 vs. $0.35 consensus) Although revenues were shy of expectations, sales volumes rose 6 percent in the quarter.

However, the stock is trading up as the oil driller raised its sales volumes for the current year to 232 million-236 million (up 5 percent-7 percent from last year).

4) Pulte Group surprised the Street with its first profitable quarter since 2006 (earnings of $0.20 vs. loss of $0.01 consensus), boosted by tax benefits and lower costs. Bucking the trend of steep order declines that other homebuilders have reported, Pulte saw its orders jump 25 percent from the year-ago quarter. The builder noted that demand has stabilized at low levels after the sharp pull-back following the federal homebuyer tax credit expired in April.

CEO Richard Dugas, Jr. expects a “modest seasonal pick up in the second half,” but warns better economic data are needed for a significant housing recovery.


1) Shares of Barnes and Noble are soaring after the company announced it is evaluating strategic alternatives. As part of the process, the bookseller has formed a committee to examine possible alternatives that could boost shareholder value. The company’s founder (and largest shareholder), Leonard Riggio, has also told the company’s board that he may consider participating in an investor group that could eventually place a bid for the firm.

The company cautions that “there can be no assurance” a sale or any other transaction will materialize at the end of the process.

2) Walgreen reported disappointing 0.4 percent rise in July same-store sales. General merchandise (up 1.1 percent) and pharmacy sales (flat) were both below expectations as a greater number of lower-priced generic drugs and fewer flu cases impacted sales.

3) Hertz’s Q2 earnings beat Street estimates by a penny as car revenues climbed 10 percent (excluding currency impact). Greater demand and longer rentals offset some price decreases. Also helping: the rental car agency’s ability to successfully reduce its fleet costs dramatically over the past couple of years.

Looking ahead, the company’s revenue guidance is inline with estimates ($7.5 billion-$7.7 billion vs. $7.6 billion consensus), but earnings are seen below expectations ($0.43-$0.45 vs. $0.46 consensus).

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