Following up on yesterday’s New York Fed reading on the manufacturing sector, this morning we got the manufacturing numbers from the neighboring Philadelphia Federal Reserve bank region. Similar to the Empire Fed’s reading for six months out, the Philly Fed’s index for General Business Conditions pulled back a bit in July falling to 24.1 from 27.5 in June.  In absolute terms, that was the least volatile one month swing in the index since November of last year.  Additionally, although it indicates a slower rate of improvement in July than June, it still indicates that the region’s manufacturing sector expanded for a second consecutive month after three months of contractionary activity.

Although the headline number fell in July, the internals paint a much more positive picture.  Almost every category is now showing an expansionary reading with the exception of Inventories and Delivery Times, though both of those in contraction is not necessarily negative. Granted negative readings of these two, as well as a sizeable drop in Shipments, did contribute to the weakness in the July headline number.

This month’s release indicated solid overall demand with New Orders surging to 23 from 16.7 last month.  Unfilled Orders also rose; moving back into expansion territory after four months of contraction. Meanwhile, Shipments were down 10 points to 15.3, but that is still a firmly expansionary reading.

In addition to the strong levels of those indices, respondents reaffirmed the strength in demand by reporting higher prices for the second month in a row in terms of both prices received and paid.

As previously mentioned, both Delivery Times and Inventories showed contractionary readings this month, but that again is not necessarily a bad thing. The Philly Fed’s index on delivery times has fluctuated between positive and negative readings in recent months while other Federal Reserve regions have seen their equivalent readings surge to extremely elevated readings (albeit lower more recently) pointing to supply chain disruptions and longer lead times. The tip into negative territory for the Philly Fed’s index of Delivery Times indicates shorter delivery times and potentially some further normalization in supply chains. Additionally, the index for Inventories fell to its lowest level since September of 2016. That indicates large inventory drawdowns which reasonably can be evaluated as a result of a pick up in demand given the increase in other areas of the survey.

As with yesterday’s Empire Fed report, one of the major highlights of this month’s Philly Fed report was the massive increase in readings on employment.  The index for Number of Employees and Average Workweek were the categories to see the biggest increases in this month’s survey returning to positive territory. For these two respective indices, this month’s gains were also some of the largest of all reports since the beginning of the survey. In fact, for both indices, there have only been two months with higher monthly increases. For both indices, one of those months was this past May’s report. As for the other month, the other larger monthly gain for the index for Number of Employees was May of 1975 and for Average Workweek it was June of 1970. These huge jumps also bring both indices into the upper 90th percentiles of all readings. In other words, Philly area manufacturers seem to have not only brought people back to work but also are returning to longer workweeks. Click here to view Bespoke’s premium membership options for our best research available.

The Department of Labor released weekly jobless claims this morning and the results were mixed.  For initial claims, they remain stubbornly above 1 million at 1.3 million. That was above expectations of 1.25 million but was still another decrease week over week, making it a record fifteenth streak week with lower jobless claims on a seasonally adjusted basis. This week was also yet another example of how even though claims are improving, the pace of improvement has slowed dramatically. In fact, claims only fell 10K this week. That is the smallest decline of these past 15 weeks.

Although the seasonally adjusted number showed a small improvement, actual reported claims on a non-seasonally adjusted basis actually rose from 1.395 million to 1.503 million. That was the highest reading since the first week of June. Additionally, that increase was the first time that jobless claims (NSA) rose since the last week of March, snapping a record streak of 13 consecutive weeks with lower claims.

Given continuing claims are lagged an additional week, they would not reflect that uptick as that reading continued to fall.  Seasonally adjusted continuing jobless claims now total 17.34 million which is the lowest since the second week of April.

Looking at claims on a state by state basis, the main drivers of higher NSA claims this week have been some of the states with the largest increases in COVID cases like California, Georgia, and Florida. In the case of Florida, it saw a massive increase in first time jobless filings, nearly doubling from 66,941 last week to 129,408 this week. Meanwhile, Texas is bucking that trend with one of the largest improvements in claims despite higher case counts.  As for continuing claims in the week ending July 4th, Florida, California, Georgia, Pennsylvania, and Texas, have all seen the largest increases in continuing claims. New York, North Carolina, and Texas on the other hand have seen the biggest declines. Click here to view Bespoke’s premium membership options for our best research available.

The New York Federal Reserve released its July reading on the manufacturing sector this morning and for the first time since February, the headline index indicated that activity rose month-over-month in the region.  Not only was it the first expansionary reading (those above 0), but at +17.2, it was also the highest level of the index since November 2018 when it stood at +21.1.  This month also marked a third consecutive monthly increase.

Although the index for present conditions is showing some of the strongest levels of the past couple of years with another uptick in July, optimism for the next six months pulled back.  The index for general business conditions six months in the future fell to 38.4 from a multi-year high of 56.5 in June.  That 18.1 point decline was the largest since March’s 21.7 point decline and the ninth-largest decline of all months.

While the pickup in activity was not as large as last month, for multiple individual categories the gains were still in the 90th percentile or better of all periods.  Conversely, the declines in the indices for expectations for General Business Conditions, New Orders, and Shipments were all in the bottom decile of all readings.  This month’s report also marked a turn for a few components as they changed from contractionary to expansionary. This was the case for the indices for General Business Conditions, New Orders, and Number of Employees. Now more than half are expansionary.

The two indices that rose the most this month were those for New Orders and Shipments.  For the index for New Orders, it was the first non-contractionary reading since February, and for Shipments, it marked back to back readings above 0.

One major positive of this month’s report was the reading on employment.  After four straight months of a greater share of manufacturers reporting decreases in employment, July marked an equal share of companies reporting an increase in employment as a decrease (21.9%). Additionally, the reading for future expectations rose to its highest level since August of last year indicating companies are at least expecting to increase hiring in the near future. Although employment was stabilized, average workweek did continue to fall, albeit, not by as much as previous months.  Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.

Bespoke’s Earnings Explorer tool is all an investor needs to navigate what is usually a messy period each quarter — earnings season.  The Earnings Explorer tool provides a full calendar of upcoming reports along with detailed historical earnings information for individual stocks that ties the data up into a nice bow that you can use to make informed decisions.  You can use the tool to search for historical reports and summary data for individual stocks, or use our screening page to find stocks that typically beat or miss estimates, raise or lower guidance, or trade higher or lower in reaction to earnings.  It’s also a great way to track macro earnings trends to see how strong or weak reports have been coming in lately as well as how strong or weak share price reactions to earnings have been.  We urge you to try out our Earnings Explorer if you have never used it.  You can do so with a two-week free trial to Bespoke Institutional.

Below is a chart included on our Earnings Explorer page that shows the number of earnings reports by day over the upcoming month.  As shown, the next three weeks will consistently see dozens of reports per day.

At the start of each earnings season, we provide a few lists of important stocks set to report in the coming weeks.  Below is a list of the 35 largest stocks set to report over the next month.  For each stock, we include its current consensus analyst EPS and sales estimate along with its historical EPS beat rate and its average one-day share price change on its earnings reaction day (on an absolute basis).  This lets you see how volatile a stock typically is in reaction to its earnings report.

Of the 35 largest stocks set to report, Apple (AAPL), Facebook (FB), Johnson & Johnson (JNJ), Mastercard (MA), Cisco (CSCO), and AbbVie (ABBV) have topped analyst EPS estimates the most often at 89% of the time or more.  In terms of share price volatility, stocks like Netflix (NFLX), Tesla (TSLA), and Amazon (AMZN) typically experience a one-day move of more than 8% (in either direction) on their earnings reaction days.  On the flip side, stocks like JNJ, Verizon (VZ), Exxon Mobil (XOM), and Chevron (CVX) typically see a one-day change of less than 2% on their earnings reaction days.

On an average basis, the 35 largest stocks set to report over the next month are much less volatile on their earnings reaction days than all stocks set to report.  Whereas all stocks set to report over the next month have historically seen their share prices average a one-day move of +/-5.57%, the average one-day move of the 35 largest stocks in reaction to earnings is just +/-3.84%.  In terms of beat rates, the largest stocks typically exceed EPS estimates at a much higher rate than average as well (75% vs. 61.5%).

Moving on, below is our list of the 35 stocks set to report over the next month that typically see the biggest moves in reaction to earnings.  To make the list, the stock must have at least five years worth of quarterly earnings reports.  Each of the stocks listed below typically moves at least 11% up or down on its earnings reaction day (the first trading day following its earnings report).  The Container Store (TCS) is the most volatile stock on earnings with an average one-day change of +/-16.8% after it reports.  TCS is scheduled to report after the close on Tuesday, July 28th.

The next most volatile stocks in reaction to earnings which all average one-day moves of more than 15% are Enphase Energy (ENPH), Groupon (GRPN), and Infinera (INFN).  While GRPN and INFN are both down 20%+ YTD, ENPH is up 113.9% on the year, which means expectations for its upcoming report on 7/30 will be sky-high.

Other notables on the list of most volatile stocks in reaction to earnings include Wayfair (W), Yelp (YELP), LendingTree (TREE), Chegg (CHGG), Twitter (TWTR), Netflix (NFLX), Etsy (ETSY), and Grubhub (GRUB).

As shown in the table, Netflix (NFLX) is by far the largest stock on the list with a market cap of $230 billion.  The next largest stock on the list — Twitter — has a market cap that’s just a tenth of NFLX.  Even though it’s now an established blue-chip S&P 500 company, NFLX still typically sees huge moves when it reports its quarterly numbers.  We’ll get to see how the stock reacts to its Q2 2020 report soon as NFLX is set to report Thursday after the close.  Earnings definitely do not usually give shareholders a chance to “Netflix and chill.”  We urge you to try out our Earnings Explorer tool today!  It’s a must-have during earnings season.  One of the benefits of the tool is it allows you to create a custom earnings release calendar for just the stocks that you follow most closely.  You’ll never be blindsided by an earnings report again.  Simply start a two-week free trial to Bespoke Institutional to gain access to our Earnings Explorer tool now.