Thursday, August 7, 2025
Another full morning of market data to go through today, which will help articulate where we are in several accounts of the massive U.S. economy. Pre-market futures were at peak highs just ahead of new economic prints this morning, but we remain in healthy, positive territory. The Dow is +185 points at this hour, the S&P 500 is +35 and the Nasdaq is +120 points.
The small-cap Russell is up a solid +20 points. We’re up nicely off Friday’s selloff, but not in much of a hurry to race to fresh all-time highs. Q2 earnings season is certainly pulling its weight thus far, with more positive results across a vast array of industries than had been expected, especially earlier in the quarter, with guidance somewhat improved from Q1 earnings season.
Q2 Productivity and Unit Labor Costs Both Higher
U.S. Productivity in Q2 came in half a percentage point higher than expected this morning: +2.4% from +1.9% analysts were looking for. We expected a bounceback from the negative print the prior quarter, downwardly revised to -1.8% in Q1, but this +420 basis point (bps) jump is quite impressive. Today’s print is the strongest since Q3 2024.
Unit Labor Costs in Q2 were also higher than expected, albeit by a slimmer margin: +1.6% from +1.3% estimated, and down from an upwardly revised +6.9% the previous quarter. Of course, the idea for a strong economy is more productivity and less cost, so Q2 is a vast improvement over Q1, which admittedly was a bit of a mess.
Weekly Jobless Claims Up, Within Range
The first report on U.S. employment since last Friday’s disappointing BLS report is this morning’s Weekly Jobless Claims, which bring us back to the narrative we’d been enjoying for the past couple months:
Initial Jobless Claims of 226K were 5K higher than estimated, and warmer than the previous week’s upwardly revised 219K. But we’re still well off the near-term high +250K reported in early June.
Continuing Jobless Claims, above 1.9 million for now 11 straight weeks, is still shy of the psychologically important 2K: 1.974 million, up from a downwardly revised 1.936 million the prior week. Both new and longer-term jobless claims adhere to the slowing labor market we saw in the BLS numbers, but in a much more manageable fashion. This new longer-term jobless figure is the highest notch since November 2021.
Q2 Earnings Reports Early: Eli Lilly, Warner Bros. Discovery & More
Big Pharma staple
Eli Lilly & Co. LLY, maker of weight-loss drugs Mounjaro and Zepbound, among many others, outperformed expectations on its Q2 bottom line this morning, with earnings of $6.31 per share easily surpassing the $5.61 estimate, for a +12.5% earnings surprise, and well ahead of the previous quarter’s $3.92 per share. Revenues improved above projections by +5.5% to $15.56 billion in the quarter.
The company also raised guidance for its full year, but shares are trading down -7% on news that Lilly’s new obesity pill has performed worse than expected, with a -12% weight loss rate and a higher-than-expected dropout rate in the phase 3 trial. For more on LLY’s earnings, click here.
Warner Brothers Discovery WBD, the entertainment conglomerate, swung to a big positive earnings surprise: +$0.63 per share versus expectations to -$0.16 — +494% better than anticipated. Revenues of $9.81 billion in the quarter missed estimates by -0.15% on +3.4 million new streaming subscribers for HBO Max, Discovery, etc. Shares are up +3% in today’s pre-market. For more on WBD’s earnings, click here.
NYC-based fashion major
Ralph Lauren RL beat estimates on both top and bottom lines in its fiscal Q1 report ahead of today’s open. Earnings of $3.77 per share trounced the $3.48 in the Zacks consensus, +40% year over year, on revenues of $1.7 billion in the quarter, up +14% from a year ago. Direct-to-Consumer comps rose +13%. A solid qusrter overall, and shares are +2.3% in today’s pre-market.
What to Expect from the Stock Market Today
After today’s open, Wholesale Inventories for June will come out, following a -0.3% tally a month ago. Consumer Credit, also for June, will report later this afternoon, and it reached +$5.1 billion in its previous release. Also,
Gilead Sciences GILD,
Twilio TWLO,
Wynn Resorts WYNN,
Tripadvisor TRIP and
Take Two Interactive TTWO all report earnings after the close.
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Eli Lilly and Company (LLY): Free Stock Analysis Report Gilead Sciences, Inc. (GILD): Free Stock Analysis Report Wynn Resorts, Limited (WYNN): Free Stock Analysis Report Take-Two Interactive Software, Inc. (TTWO): Free Stock Analysis Report Ralph Lauren Corporation (RL): Free Stock Analysis Report Warner Bros. Discovery, Inc. (WBD): Free Stock Analysis Report TripAdvisor, Inc. (TRIP): Free Stock Analysis Report Twilio Inc. (TWLO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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