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U.S. stock indexes fall, but off lows
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Energy down most in S&P sectors, consumer staples biggest
gainer
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Gold rises; dollar, crude, bitcoin down
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U.S. 10-year Treasury yield dips to ~3.53%
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FLAGGING TAX RECEIPTS KNOCK ON DEBT LIMIT DOOR (1216 EST/1616 GMT)
With Tuesday's U.S. tax deadline in the rearview mirror, Goldman Sachs says this year's receipts are running far below last year's levels and it weighed the possibility for an earlier-than-expected United States debt ceiling deadline.
So far Goldman notes, in research released late on Wednesday and led by Jan Hatzius, non-withheld receipts month-to-date (MTD) were down 29% vs GS' previous expectation for a 28% decline. Its previous expectation had the U.S. debt limit deadline hitting in late July, recently moved from August.
But assuming a greater number of tax payers file electronically this year, and adjusting for calendar issues, it says MTD receipts are down 31% from last year. When the month shakes out, Goldman estimates that if April receipts are down by 35% or more, it sees the U.S. Treasury announcing a early June debt limit deadline. But if receipts finish down by less than 30%, a late July deadline is more likely, it said.
The U.S. Treasury brought in $129.82 billion in total tax receipts on Tuesday, the annual tax filing deadline, compared with $75.53 billion a day earlier, the department's daily financial statement showed on Wednesday.
But GS points out that tax collections the day after tax day
- April 18 this year - are usually as big as the deadline day
and it suggests that the U.S. Treasury won't have collected at
75% of its April and May payments until April 25.
But meanwhile the showdown over U.S. government efforts to
raise the $31.4 trillion debt ceiling for the world's largest
economy was already sending jitters through global markets,
lifting the cost of insuring exposure to its debt to the highest
level in over a decade on Thursday. And JPMorgan warned of a
"non-trivial risk" of a technical default on U.S. Treasuries.
(Sinéad Carew, Davide Barbuscia)
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DAMP DATA DUMP: JOBLESS CLAIMS, HOME SALES, PHILLY FED, LEADING INDEX (1132 EST/1532 GMT) A quartet of mostly dismal data greeted investors on Thursday morning, all of which seem to be marching in the same direction: towards the land of economic downturn.
The number of U.S. workers filing first-time applications for unemployment insurance unexpectedly ticked higher last week, rising 5,000 to 245,000 according to the Labor Department. This marks the 11th straight week of initial claims above the 200,000 mark, which is the lower end of a range associated with healthy labor market churn. It's also the latest piece of evidence that the labor market is beginning to ease, as wage growth cools, job openings continue to retreat from record highs, and layoffs continue to mount.
"Claims have steadily inched upwards since Q4 2022, adding to other employment data that show peak tightness in the labor market is in the rear-view and the Fed's aggressive monetary policy is starting to take effect," writes Matthew Martin, U.S. economist at Oxford Economics. That notion is supported by ongoing claims - reported on a one-week lag - which jumped 3.4% last month to 1.865 million. That's above the 1.7 million pre-pandemic level and might suggest that it's taking longer for fired workers to land new gigs. Pivoting from labor to housing, the sales of pre-owned homes fell by 2.4% in March to 4.44 million units at a seasonally adjusted annualized rate (SAAR), landing 60,000 to the south of consensus. While rising mortgage rates likely convinced would-be buyers to stand on the sidelines for now, it's of a piece with other recent indicators that suggest the housing market has found its basement and will soon make its way back to a level grade.
"Home sales are trying to recover and are highly sensitive to changes in mortgage rates," says Lawrence Yun, chief economist at the National Association of Realtors, which issued the report.
Yun adds that "home sales will steadily rebound despite several months of fluctuations," once the Fed presses the rate hike 'pause' button. Turning to manufacturing, mid-Atlantic factory activity sharply contracted this month. The Philadelphia Fed Business index, alias Philly Fed, plunged 8.1 points to a dire reading of -31.3, its lowest reading since May 2020, when the economy was reeling from the shock of the sharpest economic downturn on record. It also stands in sharp contrast to Monday's Empire State report, which showed manufacturing in New York State bouncing back into expansion. A Philly Fed/Empire State print below zero signifies monthly contraction. But beneath the top line, stand-alone number, things don't look quite as dismal. Prices paid - an inflation indicator - dropped back to earth and the employment picture improved while the six-month outlook was less cloudy.
While "details of the report were stronger" than the headline number would suggest, "manufacturing continues to face hurdles from softer demand for goods and higher borrowing costs," says Rubeela Farooqi, chief U.S. economist at High Frequency Economics. Here's a look at the Philly Fed vs. Empire State: And finally, the Conference Board released the March print of its Leading Economic Index (LEI) , which decreased by 1.2% to its lowest level in 28 months at double the 0.6% decline analysts had expected. The index aggregates ten forward-looking data sets, including jobless claims, ISM new orders, building permits, the S&P 500, and others. "The U.S. LEI fell to its lowest level since November of 2020, consistent with worsening economic conditions ahead," says Justyna Zabinska-La Monica, senior manager of Business Cycle Indicators at The Conference Board. Zabinska-La Monica pointed to this as a sign that "economic weakness will intensify and spread more widely throughout the US economy over the coming months, leading to a recession starting in mid-2023." The major U.S. stock indexes were red, but off earlier lows by late morning. Tesla was the heaviest drag on the S&P 500, while transports were offering a rare glimpse of green.
(Stephen Culp)
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WALL ST OPENS RED AGAINST A MIXED EARNINGS BACKDROP (1000 EST/1400 GMT)
Wall Street's major indexes opened lower on Thursday as investors digested the latest round of first-quarter financial reports with IBM Corp beating profit estimates in a positive sign for IT services demand and Tesla Inc missing first-quarter gross margin expectations. IBM shares were flat, while Tesla shares were slammed 7.6% as its profits were hurt by aggressive price cuts and CEO Elon Musk's remarks that the electric car company would put sales growth ahead of profit.
Meanwhile, in travel and leisure, Las Vegas Sands Corp shares were gaining 5.3% after its quarterly revenue
beat the Street and also helped put a shine on shares of Wynn and MGM Resorts . Alaska Air reported a
wider than expected loss and was off 0.9%.
As bank earnings continued, some regional bank shares were
under pressure as their deposits dropped in the first-quarter,
fallout from the recent crisis in confidence in the banking
sector as depositors moved their cash to bigger firms or money
market funds.
Shares in American Express Co were off 4.2% after profits missed estimates as the credit card giant set aside reserves to cover potential losses stemming from cardholders falling behind on debt repayments. The S&P 500 11 industry sectors were a sea of red with energy leading losses as oil prices fell. Here is your opening snapshot from 0956 EDT:
(Sinéad Carew)
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FOR THURSDAY'S LIVE MARKETS POSTS PRIOR TO 0930 EDT/1330 GMT - CLICK HERE <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Tesla Earnings image Rates and inflation Rates and inflation Wall Street falls on earnings weakness Jobless claims Existing home sales Philly Fed Leading economic index ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting By Sinéad Carew)
