Unemployment, manufacturing activity reports, earnings and more: Thursday's 5 things to know

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Here are the key events taking place on Thursday that could impact trading.

ECONOMIC REPORTS UNVEILED: Thursday will be a very busy morning for the release of economic data.

Beginning at 8:30 a.m. ET, two reports of significant importance will be issued, beginning with the Labor Department’s release on the number of new claims for unemployment benefits last week.

It is likely to show that the labor market remains tight. Expectations are for 230,000, up slightly from 228,000 the prior week.

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Photo taken on Feb. 4, 2022 shows the office building of the U.S. Department of Labor in Washington D.C., the United States. (Liu Jie/Xinhua via Getty Images / Getty Images)

Continuing claims, which track the total number of workers collecting unemployment benefits, are expected to rise for the third week in a row to 1.375 million (the number is reported with a two-week lag). For context, continuing claims touched a 52-year low of 1.306 million in the week ending May 21.

Also at 8:30 a.m., the Philadelphia Federal Reserve will release its index of manufacturing activity for eastern Pennsylvania, southern Jersey and Delaware. 

That report is expected to show a slight rebound in October to -5.0, remaining in contraction for a second month. Any reading below zero means that more manufacturers say business conditions are worsening rather than improving. 

For a little context, recall on Monday the New York Fed reported its gauge of New York-area manufacturing activity fell more than expected in October, remaining in contraction for a third consecutive month.

 At 10 a.m. ET, the report on existing home sales for the month of September will be issued. 

The National Association of Realtors is expected to say sales of previously owned homes fell 2.1% to a seasonally adjusted annual rate of 4.70 million units. That would be the eighth straight monthly drop, the most consecutive declines since the housing collapse in October 2007, to the lowest in more than two years (since May 2020; if you exclude the pandemic, it would be the lowest level since July 2012). It would also mark a 27.6% decline from January when sales were humming along at a 6.49 million annual pace. 

The report follows other data this week showing a housing market under great pressure from rising mortgage rates, inflation, and high home prices: new-home construction activity fell to a 2-year low, with homebuilder sentiment extending a record decline to the lowest since May 2020.

Also at 10 a.m. ET, the Conference Board’s Leading Economic index for September will be released. Watch for a decline of 0.3% from August.

3Q EARNINGS SEASON CONTINUES: The pace of third-quarter earnings season picks up Thursday, with 23 companies in the S&P 500 set to report.

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An American Airlines jet at Dallas-Fort Worth International Airport. (Max Faulkner/Fort Worth Star-Telegram/Tribune News Service via Getty Images / Getty Images)

Headliners to watch in the morning include telecom services giant AT&T, American Airlines, commodity chemicals maker and Dow member Dow Inc., steel producer Nucor, cigarette giant Philip Morris International, and freight rail firm Union Pacific among others.

WHIRLPOOL

In the afternoon watch for home-appliance maker Whirlpool, hospital operator Tenet Healthcare and another rail freight company, CSX.

 More than 10% of the companies in the S&P 500 have reported thus far.

MARKETS DOWN AMID RECESSION FEARS: U.S. stock indexes fell Wednesday as investors weighed a batch of solid corporate earnings against concerns continued interest-rate increases will cause a recession. Stocks spent the morning bouncing between gains and losses but turned lower in the afternoon. 

The S&P 500 declined 24.82, or 0.7%, to 3695.16, a U-turn from Tuesday's gains. The Nasdaq Composite Index lost 91.89, or 0.9%, to 10680.51, and the Dow Jones Industrial Average slipped 99.99, or 0.3%, to 30423.81. 

The losses came despite quarterly reports from big companies that were mostly better than expected. Soaring inflation has dimmed the investing outlook all year, but encouraging results from large U.S. banks had boosted stocks in recent sessions. 

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Traders work on the floor at the New York Stock Exchange in New York, Wednesday, June 15, 2022. (AP Photo/Seth Wenig / AP Images)

A stream of mostly upbeat reports from diverse companies Wednesday reinforced a sense the business climate has held up well so far. Still, anxiety about inflation and the Federal Reserve's response continued to preoccupy investors. The persistence of rising prices – which have consistently exceeded investors' expectations over the past year – makes strong business results a double-edged sword. 

"I think the broader issue in this earnings season is really not just how companies are doing, but the macro issues with interest rates and Fed policy," said Jimmy Chang, chief investment officer at Rockefeller Global Family Office. 

Signs that shoppers aren't ready to stop spending on dining, vacations and entertainment reinforce the case for more Fed interest-rate increases, which many investors think could cause a serious recession in the next year. 

Inflation may reduce the central bank's perceived leeway to shift gears and ease policy again to cushion the economy when it does slow. 

US DEBT, WORLD INFLATION FIGURES: The U.K. reported 10.1% inflation year over year for September, underscoring a difficult path ahead for the Bank of England as it also navigates a series of fiscal-policy reversals by the British government. 

Meanwhile, Canada's annual inflation rate, likewise reported Wednesday, was 6.9% in September, slightly above what economists had forecast. 

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Traders work the floor of the New York Stock Exchange (NYSE) on March 6, 2020 in New York City. (David Dee Delgado/Getty Images)

Yields on U.S. government debt, which largely reflect investors' expectations for how short-term interest rates will move through the maturity date, climbed on Wednesday. 

The 10-year yield rose to 4.127%, from 3.996% the day before. 

The two-year yield, more sensitive to short-term rate expectations, was at 4.55%, up from 4.435% on Tuesday. 

Yields and bond prices move in opposite directions. Yields have soared this year, slashing stock valuations by raising the competing returns offered by newly issued ultra-safe Treasuries.

MUSK FORESEES RECORD-BREAKING Q4 TESLA EARNINGS: Tesla on Wednesday reported increases in revenue and profit for the third quarter, with CEO Elon Musk attending and making statements during the electric carmaker's earnings call.

The company said it had about $21.45 billion in total quarterly revenue, up 26.8% from the second quarter and 55% from last year's third quarter. Its profits, meanwhile, were $3.3 billion, a significant increase from the $1.6 billion reported during the same three-month period in 2021.

Telsa's revenue came in lower than the $21.96 billion estimate from Refinitiv.

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Elon Musk, Tesla CEO, stands in the foundry of the Tesla Gigafactory during a press event. ( Patrick Pleul/picture alliance via Getty Images / Getty Images)

Automotive gross margin for the third quarter remained flat at 27.9% quarter-over-quarter but fell year-over-year, the company said. In the third quarter of 2021, its automotive gross margin was 30.5%.

Earlier in October, Tesla said its vehicle production for the quarter came in at over 365,000, and its deliveries were over 343,000. Both of those figures were up from the second quarter when the electric vehicle maker reported producing over 258,000 vehicles and delivering over 254,000.

TESLA

Some challenges Tesla said it faced include cost inflation of raw materials, ramp inefficiencies at certain factories, logistics volatility and supply chain issues. 

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"We're looking forward to a record-breaking Q4," Musk said during the earnings call. "Knock on wood, it looks like we'll have an epic end of year."

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