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Another 870,000 Americans filed for unemployment benefits last week

Another 870,000 Americans filed for first-time unemployment benefits last week, unexpectedly rising slightly from the prior week to reaffirm a slowdown in the U.S. economic recovery. Yahoo Finance's Emily McCormick joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss that, in addition to earnings report from Rite Aid and Darden Restaurants.

Video Transcript

ALEXIS CHRISTOPHOROUS: It looks like the job market recovery has hit a roadblock. The number of Americans applying for jobless benefits actually went up last week to 870,000 versus 866,000 the previous week. Now, jobless claims are down significantly from their peak of near 7 million back in March, but they stagnated at just over 800,000 for the past few weeks. And the high number of claims is a sign that layoffs have continued at a pretty high rate even though a number of Americans are returning to their previous jobs or finding new ones.

Here's how the stock market is reacting. The futures market is selling off. It gained momentum here right after that jobless claims report. We've got Dow futures down 168, NASDAQ futures giving back nearly 150, and S&P futures down 25 points. I want to bring in Yahoo Finance's Emily McCormick for more on today's jobless claims. Emily.

EMILY MCCORMICK: Well, Alexis, as you mentioned, we did see a greater-than-expected number of Americans newly filing for unemployment insurance last week. That number totaled 870,000, about 30,000 higher than the 840,000 that had been expected, and also an increase from the 866,000 we saw during the previous week.

Now, we also saw continuing claims at 12.58 million. That was also higher than the about 12.3 million expected, but did come down just slightly from the 12.75 million we had during the week prior. Now, take a look back at those initial jobless claims. At 870,000, this was the fourth straight week that we've seen new claims come in below that psychologically important 1 million level. But it's still quite high on a historical basis.

Now, again, the labor market has made strides in recovering from the pandemic-era high of nearly 7 million weekly new claims that we saw in late March. Now, taking a look at unadjusted claims by state, we had California, where joblessness due to the pandemic has compounded with labor markets stress due to wildfires, again at the highest in the country at more than 230,000. That was an increase of about 4,400 week over week.

And we also saw Georgia, New York, and New Jersey with high numbers of new claims over the previous week relative to the rest of the country. Most states did at least report modest increases in new claims last week in another discouraging sign of the pace of recovery in the labor market.

Now, finally, I want to point out that the number of individuals claiming benefits in all programs for the week ended September 5th-- that's the latest week that we have on record now-- fell for the first time following three straight weeks of increases. That was now at 26 million, down from the near 29.8 million that we saw in the previous week for late August, so at least seeing some improvement there. But overall, we are seeing some worrying trends of stagnation in the labor market's recovery, Alexis.

ALEXIS CHRISTOPHOROUS: All right. I want to get to a couple of earnings reports out this morning. Looks like Rite Aid coming in a little better than expected.

EMILY MCCORMICK: Absolutely. So we were seeing some strength here for Rite Aid's pharmacy-- retail pharmacy, I should say, segment-- as well as their pharmacy services. Now, we saw retail pharmacy same-store sales up 3.5% over last year. That comprised a 4.6% rise in front-of-store sales and a 2.3% increase in pharmacy sales.

We also saw pharmacy service segment revenue up 29% to $2 billion, driven primarily by an increase of $259,000 Medicare Part D member sign-ups. Now, Rite Aid also doing what not a lot of companies are doing right now, and that's offering fiscal full-year guidance. The company expect to see revenue up as much as $24 billion this fiscal year with same-store sales up as much as 4%, although the company does expect to still post a net loss of between $190 million and $140 million. And we are seeing shares of Rite Aid down just over 3% in early trading, Alexis and Brian.

- And Emily, Darden out with earnings too, a tough quarter-- Olive Garden, Longhorn Steakhouse. But they did reinstate their dividend. We saw that out of General Mills yesterday too.

EMILY MCCORMICK: That's right, Brian. So again, a tough operating environment here for restaurants, especially ones like Darden that really focus heavily on having consumers come in person to these locations. We had that company missing consensus estimates for fiscal first-quarter sales. We saw company-wide same-store sales down 29%, worse than the 26% drop that had been expected, although we did see its adjusted earnings per share from continuing operations top estimates.

Now, at Olive Garden, the company's biggest restaurant segment, comparable same-store sales fell 28%, big drop after last year's 2.2% increase and a miss compared to estimates for an increase of 24%. Now, again, reinstating the dividend here and also offering current-quarter guidance for total sales to total about 82% of those in the previous year, and that diluted net earnings per share would total as much as $0.75. So we do have Darden shares up nearly 4% in premarket trading. That reinstating the dividend and offering guidance doing a bit here to bolster that stock. Brian and Alexis.