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Q3 GDP Grew Lower than Expected

Q3 GDP Grew Lower than Expected

This story originally appeared on Zacks

Another big day for data ahead of the opening bell this morning, with some good news and a few disappointments. The market indexes are having no trouble bouncing back from yesterday’s late-day sell-off, however: the Dow is +75 points, the S&P 500 is +15 and the Nasdaq +80.

- Zacks

Initial Jobless Claims last week came in at a new post-Covid low: 281K new claims were made, below the 289K expected and the previous week’s 290K, which itself set a post-Covid low last week. These are among the freshest labor market data, including next week’s monthly payroll reports from ADP (ADP) and the U.S. Bureau of Labor Statistics for the month of October.

Continuing Claims also notched a post-Covid low, with a nice drop to 2.243 million longer-term jobless claims from the previous read’s 2.48 million. These figures continue to eat away at those lofty levels of unemployment; we’ll see that we are back on the pre-Covid track once we’re below 2 million long-term jobless claims per week. Clearly, we’re pointed in the right direction.

The initial advance print on Q3 Gross Domestic Product (GDP) came in much lower than expectations: 2.0% in the quarter from 2.8% expected, and way off the pace set in Q2, which had a second revision log 6.7% growth. The rise of the Delta variant in Q3, as well as global supply chain issues and worker shortages within our shores all played a part in the weak GDP headline. There will be two revisions to today’s report; hopefully they will be in the upward direction.

Merck & Co. (MRK) made easy work beating estimates on top and bottom lines in the Big Pharma major’s Q3 earnings report, with $1.75 per share easily outpacing the $1.52 expected, and swinging to a year-over-year profit from the year-ago’s $1.74 per share. Revenues of $13.5 billion topped the Zacks consensus by +5.9%. Shares are +2% in the pre-market on the news, breaking to gains year to date.

Caterpillar (CAT) was mixed in its Q3 report this morning, outperforming on the bottom line by 40 cents to $2.66 per share on sales of $12.4 billion, which missed the Zacks consensus by -1.38%. Yet shares are up slightly in early trading; the heavy machinery staple is only up 8% year to date.

Shopify (SHOP), on the other hand, put up weak numbers for its Q3, missing on the bottom line for the first time since the company’s IPO: 81 cents per share missed the Zacks consensus by -36.7%. Revenues of $1.12 billion missed by -2.3%. The stock had brought a Zacks Rank #4 (Sell) rating into the earnings report. Shares are down -1% in the pre-market.

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