Morning in New York: Labor Department data in the spotlight

Daily review and forecast of events on the U.S. stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

Against the backdrop of the continued cooling of the labor market, confirmed by the weak ADP data released the previous day, today's focus will be on the weekly initial jobless claims (consensus: 221k after 216k a week earlier), as well as the Challenger layoffs data for November.

The CME FedWatch estimate of the probability of a rate cut in December has fallen to around 89%, which means that the investment community is not yet fully confident in the Fed's decision. In these circumstances, any new employment data becomes particularly important. If the data turns out to be close to forecasts or weaker, it will strengthen the "dovish" expectations.

Comments from Michelle Bowman, a member of the Fed's Board of Governors, on the state of the labor market and the outlook for monetary policy could increase clarity on the regulator's next steps.

Dollar General (DG) and Kroger (KR) will report quarterly results before the main session opens. DocuSign (DOCU), Rubrik (RBRK), SentinelOne (S), Ulta Beauty (ULTA), Samsara (IOT), ChargePoint Holdings (CHPT), Hewlett Packard Enterprise (HPE) and IDT (IDT) will report at the postmarket.

Futures on US indices demonstrate about zero dynamics. We assess the balance of risks for the upcoming trades as neutral with moderate volatility. We focus on S&P 500 fluctuations in the range of 6810-6885 points (from -0.6% to +0.5% to the previous session's closing level).

- Salesforce (CRM) shares are up about 2% after posting mixed third-quarter results that were accompanied by an encouraging revenue guidance from management. The company's adjusted EPS came in at $3.25 with a consensus of $2.86, while revenue fell slightly short of the expected $10.27 billion, stopping at $10.26 billion. The company raised its own guidance for the year to $41.45-41.55 billion.

- UiPath (PATH) reported third quarter earnings per share of $0.16 and revenue reached $411 million with consensus of $0.15 and $393 million, respectively, confirming strong demand for its business automation software. This led to a rise in the company's stock price by about 10% after the close of the main trading session.

- Shares of Five Below (FIVE) reacted to the release of impressive third quarter results with a jump of about 4%, but nearly all of the growth was soon squashed. The company reported adjusted EPS of $0.68 with a consensus of $0.24, while revenue reached $1.04 billion on average market expectations of $980 million.

- C3.ai (AI) securities corrected more than 1% on the back of its quarterly report release. Its adjusted loss per share came in at $0.25 with a consensus of $0.33, while subscription revenue totaled $70.2 million with a 93% share of the total result. However, investors were disappointed by the non-GAAP gross margin, which slipped to 54% from 56.5% on average last year, and continued unprofitability despite total revenue growth to $75.1 million (+7% QoQ).

- Snowflake's (SNOW) EPS guidance for the third quarter is expected to be in the range of $0.35-0.39, with market expectations of $0.31. The revenue guidance includes a 29% YoY increase to $1.21 bln. However, the company's stock plummeted more than 8% on the back of a product revenue guidance of $1.19-1.20 bln, which translates to a 27% increase with a consensus of more than 30%. It was on these expectations that SNOW shares have risen 72% since the beginning of the year.

The trades on December 3 on American stock exchanges ended in plus. During the session, capital rotation was observed. At the end of the day, the S&P 500 added 0.3%, NASDAQ 100 rose by 0.2%, Dow Jones rose by 0.86%, and Russell 2000 rose by 1.91%. The energy sector (XLE: +1.87%) was once again the top gainer, while the utilities sector (XLU: -0.32%) remained the outsider.

Dynamics of quotations was caused by weak statistics of employment, perceived by the market as an argument in favor of reduction of FRS rate in December. It caused capital flow into shares of small capitalization companies. At the same time, the quotations of the "Magnificent Seven" were predominantly declining. Microsoft (MSFT: -2.5%) was under pressure from reports of difficulties with sales of AI products. Quotes NVIDIA (NVDA: -1%) reacted negatively to the words of its head Jensen Huang, who expressed doubt that China will buy chips H200, even if the U.S. relaxed restrictions.

Finance Minister Scott Bessent said that the current parameters of import duties will be maintained even in case of a negative verdict of the Supreme Court. The head of the Ministry of Finance refers to the existing powers of the President under the Trade Act of 1962.

The macroeconomic background generally confirms the scenario of "soft landing" of the economy. The number of new jobs in November, according to ADP data, decreased by 32 thousand, although the consensus assumed their increase by 10 thousand. This result was mainly due to small businesses: medium and large companies continued to hire staff. At the same time, the ISM Services index for November reached 52.6 points (consensus: 51.8 points, October: 52.4), and its sub-indices showed an improvement in the employment situation and a decrease in price pressure. A similar indicator from the S&P Global Services PMI, according to the final estimate, came in at 54.1 points after a preliminary 55 points, but is firmly in growth territory. The combination of a moderate increase in business activity without a jump in prices corresponds to the basic "bullish" scenario.

- Record pre-Halloween sales and successful execution of its multi-price strategy helped Dollar Tree (DLTR: +3.6%) grow EPS to $1.21 on $1.09 guidance and generate revenue of $4.75 billion on $4.70 billion consensus. The retailer's gross margin rose 40 bps to 35%. Successful sales at the start of the holiday season prompted the company to raise its full-year guidance for adjusted earnings per share to $5.6-5.8.

- Asana's (ASAN: +7.8%) third quarter earnings per share came in at $0.07, while revenue grew 9% YoY to $201 million. Management gave an optimistic outlook, citing improved net revenue retention (NRR) to 96% with positive momentum across the board, as well as the potential for sales growth thanks to AI Studio and AI Teammates.

- EPS guidance for the current quarter in the range of $1.35-1.55 with a consensus of $1.58 pressured Macy's (M: -1.1%), which posted its highest comparable sales growth in 13 quarters (+2.5%) and raised guidance for the year. Nevertheless, investors focused on the expected challenges of the holiday season.

- Another 7% cut in 2025 EBITDA guidance (to $601-611 million) due to rising professional and general liability (PLGL) provisions collapsed Acadia Healthcare (ACHC: -10.9%) shares.

- The presentation of plans to create an air cab network in Miami to connect key business centers of the region caused Archer Aviation (ACHR: +9.2%) quotations to soar. Investors positively assessed the expansion of the geography of presence and specification of the strategy of commercialization of urban air mobility.

This article was AI-translated and verified by a human editor