Wall Street ends the week under tension, since all the indices are down both for this Friday’s session and week-on-week. American markets are disturbed by growing concerns on the inflation front. After the consumer price index published earlier in the week, that of producer prices disappoints this Friday. These macroeconomic data, if they emerge as a fundamental trend, could encourage the Fed not to quickly reduce rates currently at a 23-year high…
In this context, the S&P 500 returns -0.48% to 5,005 pts (-0.32% over the week). The Dow Jones is not in any better direction and loses -0.37%, returning to 38,622 pts. The industrial values index concedes -0.44% weekly. The Nasdaq fell by -0.82%, ending at 15,775 pts (-1.05% over the week).
The producer price index in the United States for the month of January 2024 increased by +0.3% compared to the previous month and by 0.9% year-on-year. This is an additional unpleasant surprise regarding prices in the USA, since the FactSet consensus was +0.1% increase month-on-month and +0.7% year-on-year. Excluding food and energy, the January producer price index increased by +0.5% versus 0.1% consensus (+2% over one year versus +1.7% consensus).
Housing starts and building permits in the United States for the month of January stood at 1.331 million (-15%), compared to 1.47 million consensus and 1.562 million for the revised reading for the previous month. Permits are also lower than expectations, at 1.47 million (1.51 million consensus and 1.493 million a month earlier).
The University of Michigan’s preliminary US consumer sentiment index for February 2024 came in at 79.6, compared to a consensus of 80 measured by FactSet and a level of 79 a month earlier. The one-year inflation expectations indicator rises to 3% (previously 2.9%).
Thomas Barkin indicated this Friday that the economic data for the month of January were not so good, even describing them as “complicated”. The head of the Richmond Fed adds that the American central bank is getting closer to its 2% inflation target, although it has not yet achieved it.
Therefore, according to the CME Group’s FedWatch tool, the probability of a monetary status quo on March 20, following the next Fed meeting, is at 90%, which would leave rates between 5, 25 and 5.50%. The probability that rates will still remain unchanged on May 1, after the next monetary meeting, is 66% according to the same tool.
On the oil side, a barrel of WTI crude appreciated by 1.64% to $79.2. It rose by +2.92% over the week. North Sea Brent is a little more timid, with a gain of +0.78% to $83.5.
The greenback dollar is trading at 0.9278 euros, relatively stable over the week.
An ounce of gold ended at $2,013. Bitcoin takes +0.6% to $52,017.
Values
* Coinbase (+8.84% to $180.31). For its 4th fiscal quarter, the cryptocurrency exchange platform beat the consensus by posting revenues of $954 million, an increase of +52% year-on-year. Adjusted earnings per share were $1.04, compared to a loss a year earlier. The consensus was for $732 million in revenue and 9 cents in adjusted loss per share. Net profit was $273 million, compared to a loss of $557 million a year earlier. Stablecoin revenues were $172 million ($146 million a year earlier).
* Applied Materials (+6.35% to $199.57). The American semiconductor production equipment giant is very prominent on Wall Street. For the quarter ended January 2024, ‘Amat’ posted revenues of $6.71 billion, down slightly by -0.5% year-on-year, while its adjusted earnings per share were $2.13 ( $2.03 a year ago). The consensus was for $6.47 billion in revenue and $1.90 in adjusted earnings per share. The group is forecasting revenues for the 2nd fiscal quarter of around $6.5 billion ($6.3 billion consensus). Adjusted earnings per share for the period are anticipated between $1.79 and $2.15, which is also better than expected. These forecasts could signal a faster-than-expected industry recovery.
* Dropbox (-22.93% to $25.08). Despite accounts slightly higher than expected, the Californian group specializing in the cloud announced revenues of $635 million for the 4th quarter, an increase of +6% year-on-year, bringing annual revenues to $2.5 billion. Quarterly GAAP net income was $227 million ($328 million a year earlier). Adjusted net income was $171 million ($141 million for the comparable period last year. Adjusted earnings per share were 50 cents (48 cents consensus), while revenues also narrowly exceeded expectations. Steps.
* DoorDash (-8.13% to $116.01). For the 4th quarter, revenues over the period were $2.3 billion, slightly above expectations, while adjusted Ebitda represented $363 million, also better than expected. The forecasts provided for the first fiscal quarter and the current financial year were generally in line with analysts’ expectations.
* Nike (-2.4% to $103.51). The sports shoe giant will reduce its workforce by around 2%, which represents more than 1,600 positions, in the face of weak demand. The workforce reductions would represent a cost ranging from $400 to $450 million. The group had already announced in December a savings plan of $2 billion over 3 years, by reducing managerial layers and adjusting the offering of certain products. According to the Wall Street Journal, which initially announced the cuts, the workforce reductions should begin this Friday and a second phase would be finalized by the end of the quarter. The layoffs would not affect store employees or those in distribution centers or innovation teams.
* Tesla (-0.25% to $199.95). Elon Musk, CEO of the group, now owns 20.5% of the capital of the electric vehicle manufacturer, according to declarations to the SEC, the American financial markets authority. The stake shows a sharp increase compared to the 13% held in May, but remains lower than the 22% held before Musk sold Tesla shares to finance the purchase of Twitter for $44 billion. The billionaire owns more than 411 million shares of common Tesla stock and options to buy 304 million shares. Thus, Musk is getting closer to the 25% that he considered necessary to have sufficient influence on the group. Last month, the businessman indicated that he could explore certain projects outside of Tesla, particularly in artificial intelligence, if he did not obtain this level of participation.
