Wall Street is expected to increase before the market this Friday, with Meta and Amazon in particular, and despite a correction from Apple… The S&P 500 gains 0.3%, while the Nasdaq gains 0.6% and the Dow Jones stabilizes. Impressive financial results from Meta and Amazon support the tech rating. The equation is however complicated for the Fed, as the latest US employment figures for January came out surprisingly strong and wage inflation is visibly much higher than expected.
Today’s government report on the American employment situation for the month of January 2024 revealed 353,000 non-agricultural job creations, twice as many as expected! Creations in the private sector numbered 317,000, more than twice the consensus, while manufacturing job creations were 23,000. The unemployment rate remains at around 3.7%. The average hourly wage is growing twice as fast as expected, up 0.6% compared to the previous month (+4.5% over one year). The labor force participation rate reached 62.5%. The FactSet consensus was for 176,500 non-agricultural job creations and 148,000 in the private sector. The unemployment rate was expected at 3.8%. The average hourly wage was expected to increase by 0.3% month-on-month and 4.1% year-on-year.
On the economic front today in the United States, the final index of American consumer sentiment from the University of Michigan for the month of January 2024 will be communicated in one hour (consensus 78.8 according to FactSet), at the same time as industrial orders for December (consensus +0.4% compared to the previous month).
Concerning Fed rates, expectations of monetary easing are falling. Thus, the probability of a new monetary status quo leaving rates unchanged between 5.25 and 5.50% on federal funds on March 20, at the end of the next meeting, stands at more than 78%. For the meeting of April 30 and May 1, the most probable hypothesis (approximately 64%) is that of a range of 5-5.25%, i.e. a relaxation of a quarter of a point, but there is also 20% probability that rates will still remain at their current levels…
On the Nymex, a barrel of WTI crude fell 0.2% to $73.6. An ounce of fine gold lost 0.9% to $2,052. The dollar index increased by 0.5% against a basket of reference currencies. On the bond markets, the yield on the 2-year T-Bond is 4.36%, compared to 3.99% on the 10-year and 4.19% on the 30-year…
Values
Meta Platforms jumped 17% (!) before market. Mark Zuckerberg’s group largely exceeded the profit consensus for the closed quarter, announced a new share buyback program, and also revealed a first dividend! For the just-ended fiscal fourth quarter, adjusted earnings per share were $5.33, while revenue was $40.1 billion. The consensus was $4.94 EPS for $39 billion in revenue. A year earlier, during the same period, revenues stood at $32.2 billion. Advertising revenues for the closed quarter were 38.7 billion, against 37.8 billion consensus.
Reality Labs, which notably houses the effort in the ‘metaverse’, lost 4.6 billion dollars in the quarter ended against 4.3 billion a year before, but the division is starting to generate significant revenues at 1.07 billion dollars.
Meta also increased its share buyback authorization by $50 billion and initiated its first dividend, at 50 cents per quarter or $2 over the year. Bloomberg measures that Zuckerberg alone will receive around $700 million in cash per year in dividends, since he holds around 350 million shares.
For its first fiscal quarter, Meta is forecasting revenues of $34.6 to $37 billion, which also clearly exceeds the consensus, which is close to $34 billion. The social media giant now claims 2.11 billion daily active users on Facebook, compared to 2.07 billion consensus… For 2024, the group plans expenses ranging from 94 to 99 billion dollars.
Amazon (+7% in pre-session), the American online commerce giant, unveiled accounts last night that exceeded market expectations, propelling the stock to Wall Street after market trading. For its fourth quarter, the group achieved revenues of 170 billion dollars, an increase of 14% year-on-year, compared to a consensus of 166 billion. Adjusted earnings per share were $1, well above the consensus of around 80 cents. Net profit reached $10.6 billion. Andy Jassy, general manager of the group, who speaks of a record holiday season, is also continuing efforts to integrate generative AI into the various services. He believes this is starting to improve results. Concerning AWS, giant of cloud services, quarterly turnover reached 24.2 billion dollars, very close to market expectations and growing by 13%.
For the current quarter, the group envisages revenues ranging from 138 to 143.5 billion dollars, against 142 billion consensus.
Apple, the Californian giant from Cupertino and the second largest market capitalization in the world behind Microsoft, lost more than 3% before the market on Wall Street. Tim Cook’s group was not completely convincing, despite its figures being higher than market forecasts. Operators are particularly concerned about the situation in China, where the group posted disappointing sales. In the quarter ended in December, a crucial period of the holiday season, the group achieved total sales of 119.6 billion dollars, against a consensus of 117.9 billion. Quarterly earnings per share were $2.18 versus $2.10 consensus. iPhone sales rose 6% to $69.7 billion, compared to analysts’ average forecast of $67.8 billion. Services revenue was $23.1 billion in the quarter, a new record and growth of 11%.
Nonetheless, markets view Apple as lagging behind in AI compared to other big tech names, and the recent launch of the Vision Pro mixed reality headset is unlikely to have a major impact on accounts in the near term. In addition, Apple faces tough competition with Huawei in China. The Apple group’s Chinese sales in the fourth quarter were only 20.8 billion dollars, while the consensus was at 23.5 billion… Among the group’s other flagship products, Mac computers posted a slight increase in sales to $7.78 billion over the quarter, in line with expectations, while iPad sales fell 25% to $7 billion.
Microprocessor giant Intel has pushed back a $20 billion chip manufacturing project in Ohio due to market challenges and slow implementation of U.S. subsidies, according to the Wall Street Journal. The initial schedule called for production to begin next year. However, construction of the facilities is not expected to be completed before the end of 2026, according to WSJ sources. The group, for its part, says it is determined to complete the project and ensures that construction continues.
Microchip Technology, the American chip designer, exceeded market expectations in terms of profits for its fiscal third quarter, posting adjusted earnings per share of $1.08 compared to a consensus of $1.06 and a level of $1.56 a year ago. Revenues totaled $1.77 billion, compared to $2.17 billion a year earlier and slightly below expectations. Thus, sales fell 22% sequentially and 19% year-on-year. For the fourth fiscal quarter, the group expects revenues ranging from $1.225 billion to $1.425 billion and adjusted EPS ranging from 46 cents to 68 cents.
Clorox, the American player in cleaning products, climbs before the market on Wall Street. The group published accounts yesterday evening that exceeded expectations and raised its forecasts. For the closed quarter, adjusted earnings per share were $2.16, significantly above consensus. The group forecasts annual adjusted earnings per share ranging from $5.30 to $5.50, compared to a previous range of $4.30 to $4.80. Revenue is now expected to decline in the low single digits, compared to a previously expected mid- to high-single digit decline and a 5% decline according to consensus.
Cigna, the American health insurance group, announced a net profit of $1.03 billion for its fourth fiscal quarter, compared to $1.19 billion a year earlier. On an adjusted basis, however, EPS increased 35% to $6.79, well above expectations. Total revenues for fiscal 2023 were $195.3 billion, while net income accounted for $5.2 billion and adjusted profit from operations $7.4 billion. Cigna now anticipates annual adjusted earnings per share of at least $28.25, compared to at least $28 previously and a market consensus of $28.3. Thus, the adjusted profit from operations for the 2024 financial year would be more than $8.025 billion.
ExxonMobil posted its second best annual profit. The American oil giant beat consensus with adjusted profit of $9.1 billion for the closed quarter and $38.6 billion for the year. The group returned more than $32 billion to shareholders last year through dividends and share buybacks. Over the past quarter, earnings per share reached $2.48 versus around $2.2 consensus, while revenues totaled $84.3 billion versus $86 billion market consensus.
AbbVie revealed adjusted earnings per share of $2.79 for the closed quarter, slightly above consensus, for revenues of $14.3 billion also better than expected. The quarterly dividend is increased by 5%. The group anticipates adjusted earnings per share ranging from $11.05 to $11.25 for the 2024 financial year, guidance which surrounds the market consensus.
Chevron announced adjusted earnings per share of $3.45 for the past quarter, well above consensus, but revenues of $47.2 billion were too short. The oil group increases its dividend by 8% to $1.63 per quarter. Quarterly consolidated net income was $2.3 billion, while adjusted profit was $6.5 billion. Annual global and American production is record high.
Regeneron, the American biotechnology laboratory, announced fourth-quarter revenues higher than market expectations with its blockbuster Eylea, whose sales totaled $1.46 billion. Total quarterly revenues thus amount to 3.43 billion dollars against 3.3 billion consensus. Earnings per share also beat consensus at $11.86, versus $10.7.
Bristol-Myers Squibb, an American pharmaceutical group, exceeded profit and revenue expectations for the closed quarter, and revealed 2024 earnings per share guidance higher than expectations. In the fourth quarter, the group generated adjusted earnings per share of $1.70 versus a consensus of $1.53. Revenues totaled 11.5 billion, while analysts expected 11.2 billion on average. 2024 adjusted earnings per share are anticipated between $7.10 and $7.40.
