ADP Payroll Rallies US Market & MRVL Higher ?
US labour market has continued to show signs of further cooling in 4th quarter of 2024.
With occasional signs of labor market tightness within data, as seen on Wed, 04 Dec 2024 ADP payroll report. (see below)
ADP Payroll.
US private payrolls growth slowed in November 2024.
For November 2024, private payrolls rose by 146,000 jobs, after advancing by a downwardly revised 184,000 in October, the ADP National Employment Report showed on Wed, 04 Dec 2024.
This is a change of -20.65% from October’s data and a +41% YoY.
Economists had forecast private employment payroll to come in at 166,000 positions after a previously reported gain of 233,000 in October.
Actuals fell short of expectations, raising hopes of another interest rate cut by the Fed later this month.
Nevertheless, it harbours modest improvement after a couple of soft summer months (July to September).
Like the JOLTs report, that’s considered “outdated” due to its data being 2 months “late” by the time it is released — ADP is also viewed as an unreliable predictor of the US government’s non-farm payroll estimates issued by the Bureau of Labor Statistics (BLS).
Still, it should be noted that both ADP and Non-farm payroll reports do move in the same direction over time.
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US private sector payroll for November 2024, showed that the median YoY pay increase for job switchers rose to 7.2% in November 2024, upped from October’s 6.7%.
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Meanwhile, YoY pay increase for job stayers rose to 4.8% from 4.7% the month prior, marking the first monthly increase in wage growth for job stayers in 25 months.
In Summary
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Businesses (in private sector) are not hiring in bunches anymore.
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They are not laying off many people, either.
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Job creation has been steady and unemployment rate is still low at 4.1%.
According to ADP chief economist Nela Richardson:
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Job changers are the most sensitive to real time labour market conditions.
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When they are getting paid a little bit more in November than in October, it implies that its still a little tight in the labour market.
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That should be meaningful to the Fed and a challenge to them, digesting inflation prints that have shown little progress in recent months.
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When inflation is sticky and coupled with strong wage growth, one cannot be on a preset course to cut interest rates.
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This is because that could come and bite you later.
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In short, the Fed is still going to be very cautious, very data dependent.
US 3 Composite Indexes.
On the back of a “cooling” private sector payroll data, the S&P 500 and tech-heavy Nasdaq Composite leapt to intraday record highs on Wednesday, as markets edged higher, buoyed by tech stocks.
By the time market called it a day:
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DJIA: +0.69% (+308.51 to 45,014.04). Closed above 45,000 for the first time ever.
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S&P 500: +0.61% (+36.61 to 6,086.49). Fresh high closing.
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Nasdaq: +1.30% (+254.21 to 19,735.12). Clinched a record of its own.
Acting in unison, US markets kept moving higher as Fed chair, Mr Powell spoke at the New York Times DealBook Summit.
He did little to shake investor confidence that the Fed will cut interest rates at its December meeting.
As he touted the US economy in "remarkably good shape" as a reason he feels the Fed can be "afford to be a little more cautious" in its interest rate cutting path.
I thought Mr Powell gave a non-committal remark (something he is very good at doing), yet investors were confident that an impending 25 basis points reduction is in the pipeline ? (see below)
Latest CME FedWatch Data.
As of Wednesday, markets were factoring a 77.5% probability that the Fed will cut interest rates by -0.25% at its final meeting of the year on 18 Dec 2024, per the CME FedWatch Tool.
This was an increased from Tuesday’s 73.8% probability. What a difference a day makes !
Just as Nasdaq charted another ‘all-time-high’ on Wednesday, so did $Marvell Technology(MRVL)$.
It was the top performing stock on the Nasdaq on percentage gains:
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On Wednesday, stock price rose +23.19% ($22.24) to end the day at $118.15 per share. (see above)
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YTD, MRVL has gained a respectable +103.11% or $59.98).
Q3 2025 Quarterly Earnings.
This comes hot on the heels of its Wednesday release of Q3 2025 quarterly earnings :
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Earnings per share (non GAAP): was $0.43 vs analysts’ expected $0.41 vs $0.30 (Q3 2024).
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Net Revenue: was $1.516 billion vs analysts’ forecast $1.46 billion vs $1.273 billion (Q3 2024).
The gains were primarily driven by a 98% rise in sales from the data center end market.
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Gross profit: was $349.4 million, down -36.6% from $551.2 million (Q3 2024).
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Gross margin: Expectedly gross margin has decreased from 38.9% in Q3 2024 to 23.0%.(Q3 2025).
Q4 2025 Outlook.
Equally important is MRVL’s outlook for Q4 2025. Traders always look at these figures to determine if it is a bull or bear for a listed stock.
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Earnings per share (adjust) is expected to be $0.59 (+/- $0.05). MRVL’s forecast topped analyst projections of $0.52.
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Net revenue is expected to be $1.800 billion, +/- 5% variant.
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Gross margin (non GAAP) is expected to be approximately 60%.
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In the earnings’ call conference, MRVL’s management emphasized on the momentum in (a) AI silicon programs and (b) interconnect product demand.
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Company’s strategic focus on these areas is expected to drive substantial growth into fiscal 2026.
Price Target Updates.
After Q3 earnings were out, Wall Street wasted no time to revise MRVL’s price targets :
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B. Riley Securities - up from $105 to $135, with “Buy” rating.
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$Morgan Stanley(MS)$ - lifted price target from $82 to $102, with “Equal weight” rating.
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Based on Wednesday closing price ($118.15), it represented a +14.26% upside and -13.67% downside, respectively.
Looking at its quartery performances, Is there anything not to like about MRVL ?
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Do you think Marvell Technology is a “Buy” based on earnings alone ?
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Do you think MRVL will continue to chart new highs or pull back today while waiting for Friday’s non-farm Jobs report ?
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