The Week Ahead on Wall Street

Economic News

Today, there is no economic data scheduled to be released.

Tomorrow, the NFIB releases its small business index for October. This data point tracks how small business owners feel about the economy and their prospects. Confidence among small business owners slipped slightly in September amid labor shortages and supply-chain disruptions, which hurt operations. Investors will be paying attention to see if confidence worsened in October.

On Wednesday, initial existing unemployment claims for the week prior are released. This data point typically comes out on Thursday, but data is being released a day early due to the Veterans Day holiday. Last week initial unemployment claims declined to a new pandemic low of 269,000.

On Thursday, there is no economic data scheduled to be reported.

On Friday, be on the lookout for the University of Michigan’s Consumer Sentiment Index for November. In October consumer sentiment slipped as supply-chain disruptions and rising prices weighed on consumers’ moods. With inflation continuing to increase, all eyes will be on this reading to see how consumers are feeling about the economy as we head into the holiday season.

Earnings Reports

Today, AMC Entertainment (AMC) reports quarterly earnings. Investors have felt more optimistic about the movie theater chain’s prospects in recent weeks. With movies drawing a lot of viewers into theaters, more studios are rethinking plans to release films in theaters and online at the same time. Investors will be paying close attention to see what impact this trend will have on AMC’s bottom line.

Tomorrow, be on the lookout for Coinbase (COIN) to weigh in with quarterly earnings. The cryptocurrency exchange operator just began testing a new subscription service called Coinbase One. Customers won’t have to pay commissions on trades but will still pay the fees to buy and sell crypto. Coinbase will likely provide more details about the new program when it reports quarterly earnings.

Also, Tuesday DoorDash (DASH) reports quarterly earnings. The delivery startup recently teamed up with ADT to protect drivers. The new safety features will be available for US DoorDash drivers by the end of the year.

On Wednesday, Affirm (AFRM) reports quarterly earnings. The company has been a big beneficiary of the movement toward buy-now, pay-later. However, that business model is starting to fray with Affirm and other industry players reporting an increase in delinquent accounts. That is raising red flags among investors, given that the economy is regaining strength and consumer confidence is holding up. Investors will undoubtedly want to learn more about these trends when Affirm weighs in with its earnings.

On Thursday, be on the lookout for Brookfield Asset Management (BAM) to report quarterly earnings. The asset management company is part of a group which just paid $7.7 billion for AusNet Services, the Australian electricity and gas company. The move comes as energy prices are soaring amid strong demand and inventory shortages. More details on that transaction will likely be revealed when Brookfield reports earnings.

The Week Ahead at SoFi

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The Labor Market Regains Strength in October

US Job Market Comes Back

The US job market came roaring back in October, as declining COVID-19 cases drove more people back to work. Nonfarm payrolls in October rose to 531,000 topping economists’ forecast for 450,000 job gains during the month. The unemployment rate dropped to 4.6%, which was also better than the 4.7% economists were expecting. Excluding government jobs, private payrolls increased by 604,000.

At the same time, the average hourly earnings of workers in the private sector increased 4.9% in October compared to a year earlier. This also marks an increase from previous months. The uptick in jobs in October is a big reversal from September when the economy added a revised 312,000 jobs. Back then the Delta variant of COVID-19 was still rapidly spreading.

Investors Are Relieved

The strong jobs report sent stocks higher Friday, as investors released a collective sigh of relief. Concerns that rising inflation and labor shortages would hurt economic growth have been alleviated, at least for now. October marked the first month in a while in which economic recovery wasn’t hit with a surge of COVID-19 cases.

Meanwhile, employers desperate to hire more workers to meet strong consumer demand are raising wages, offering bonuses, and providing more flexible work schedules. At the same time, households are spending a lot of their savings amassed during the pandemic. With federal stimulus and extra unemployment benefits over, many are returning to work.

Hospitality Leads the Way

The leisure and hospitality sector led the job gains in October, adding 164,000 workers. Americans are eating out again, hitting bars, and going on vacations, which is driving demand for hospitality workers. So far this year, the leisure and hospitality sector has regained 2.4 million jobs which disappeared during the pandemic. The professional and business services, manufacturing, transportation, warehousing, construction, and healthcare industries also saw job growth in October.

While concerns about inflation, job shortages, and COVID-19 are still weighing on investors’ minds, October’s jobs report is reason to be optimistic. Investors are now paying close attention to see if the job growth seen in October continues in the coming months.

Peloton Struggles as Uber and Airbnb See Gains

Pandemic Winners and Losers Change as Reopenings Continue

The pandemic winners and losers are getting shaken up, with stay-at-home stocks experiencing slowdowns in demand at the same time that pandemic losers are recovering. This is a trend which many investors have been betting on since COVID-19 vaccines became available. With COVID-19 cases declining, people are venturing out and returning to work. They are ditching their stay-at-home distractions for experiences outside of their homes.

Peloton (PTON) has certainly felt the impact of these trends. For the fiscal first quarter, the at-home fitness equipment maker posted its slowest quarterly gain in subscribers since its public debut. The company now expects annual revenue to be as much as 20% lower than its earlier forecast. Meanwhile, Planet Fitness (PLNT) said same-store growth returned in the third quarter, so much so that it raised its full-year sales and new store openings targets for this year.

Uber Sees Demand Surge

The ride-hailing giant Uber (UBER) is having a completely different experience than it did at the onset of the pandemic as the economy reopens. Lifted by demand for rides and food delivery, Uber recently posted revenue of $4.8 billion—up 72% year-over-year and ahead of Wall Street’s forecasts. On an EBITDA basis, Uber was profitable for the first time ever.

Unlike Peloton, which saw subscriber growth slow, Uber’s customers are getting out more and as a result are hailing rides. Monthly active users at Uber increased 40% year-over year while trips increased 39% to 1.64 billion. Gross bookings were up 67% during the quarter. Even Uber’s delivery business saw strong growth, with sales up 97% year-over-year.

Airbnb Posts Record Revenue, Net Income

Airbnb (ABNB), which also struggled during the pandemic, is seeing business improve as more people receive vaccinations across the globe and begin traveling again. During the third quarter, Airbnb said 79.7 million nights and experiences were booked on the platform, which is up 29% year-over-year. It is slightly lower than the second quarter and Wall Street’s target for 80.8 million. Urban and cross-border travel has not resumed at Airbnb, yet the company posted its highest quarterly revenue and net income ever. Revenue of $2.24 billion was up 67% compared to last year while net income soared 280% to $834 million.

The pandemic changed the way we work out, travel, and get around. Though the pandemic is not over, some patterns of pre-pandemic life are beginning to make a comeback. Whether that continues comes down to if COVID-19 cases rise again and if the country is able to manage potential spikes in the future.