Wall Street has appeared a little more uncertain since the start of the week, in the wake of its series records on the Dow Jones, S&P 500 and Nasdaq 100 indices… The S&P 500 gains 0.17% to 5,078 pts, while the Dow Jones fell by 0.25% to 38,972 pts. The Nasdaq nevertheless progressed by 0.37% to 16,035 pts. On the Nymex, a barrel of WTI crude gained 1% to $78.45 on rumors of a renewal of the restriction of OPEC production quotas. The dollar index stabilizes against a basket of reference currencies.
On the economic front, orders for durable goods in the United States for the month of January 2024 were down sharply by 6.1% compared to the previous month, compared to a consensus of -4.5% measured by FactSet. Excluding defense and air, these orders increased slightly by 0.1% compared to the previous month. Excluding transport, orders declined by 0.3% versus +0.2% consensus.
Operators also followed the S&P Case-Shiller home price index (+0.2% for the adjusted 20-City index for December compared to the previous month), as well as the FHFA index (+0.1 % month-on-month, in line with expectations).
The American consumer confidence index measured by the Conference Board for the month of February 2024 stood at 106.7, compared to a consensus close to 115 and a revised reading – down – to 110.9 a month earlier.
The Richmond Fed’s manufacturing index for the month of February stood at -5, compared to the FactSet consensus -10 and -15 a month before.
Jeffrey Schmid, head of the Kansas City Fed, said “there was no urgency to lower rates preemptively.” He remains concerned about the level of inflation, which remains above the objective (2%). According to this official, we should therefore not prematurely ease monetary policy. Instead, Schmid recommends remaining patient and continuing to observe how the economy responds to previous monetary tightening, while awaiting additional evidence of a victory against inflation…
Janet Yellen, the American Secretary of the Treasury, indicated that “monetary tightening across the world was creating a downside risk.” During a press conference in Sao Paulo, Yellen suggested that a rate cut could now “be appropriate”, while inflation has already fallen in many countries… She clarified that the risks Geopolitics posed another danger, with the possibility of significant fallout in the event of an escalation of conflict in the Middle East.
According to the CME Group’s FedWatch tool, the probability of an additional monetary status quo leaving the range on the fed funds rate between 5.25 and 5.50% on March 20, at the end of the next monetary meeting, is over 97%. The probability that rates will still remain unchanged on May 1 after the next meeting reaches more than 84%. The first monetary easing could take place on June 12…
Values
Zoom Video Communications jumped 8%, the group having exceeded expectations in terms of sales and profits for the closed quarter. Zoom also announced a $1.5 billion stock repurchase plan, as a previous $1 billion authorization expired this month. For the quarter ended, revenues increased 3% to $1.15 billion, while adjusted earnings per share came to $1.42. For the current financial year ending in January 2025, the group plans revenues of $4.6 billion, fairly close to market expectations, for adjusted earnings per share ranging from $4.85 to $4.88 to be reconciled. from a consensus of around $4.7.
Workday (-3.9%), the American group specializing in cloud applications in the field of human resources and finance, is stumbling on Wall Street. The software group nevertheless beat the consensus for the closed quarter. For this fourth fiscal quarter, revenues totaled $1.92 billion. Adjusted diluted earnings were $1.57 per share, versus $1.47 consensus. The Californian group, however, posted subscription revenues that were considered somewhat disappointing. Workday also announced its intention to buy the firm HiredScore, active in artificial intelligence linked to HR data. The transaction is expected to close in the first quarter of fiscal 2025. Finally, Workday maintains its 2025 subscription revenue estimates ranging from $7.73 billion to $7.78 billion. Over the closed quarter, these subscription revenues increased by 18% to 1.76 billion.
Oneok (+2%), the American hydrocarbon transport group and gas pipeline operator, announced for its fourth fiscal quarter a profit improving by more than 40%, with the increase in volumes transported of natural gas. Quarterly net profit was $688 million, or $1.18 per share, compared to $485 million a year before, for the same period. Synergies from last year’s $18.8 billion acquisition of rival Magellan Midstream are expected to be $175 million in the first year following completion. Finally, Oneok expects, for 2024, a net profit ranging from 2.61 to 3.01 billion dollars.
Lowe’s (+1.7%), the American retailer of home products, published revenues of $18.6 billion for its fourth fiscal quarter, compared to $22.4 billion in the corresponding period, a year before. Earnings per share still exceeded expectations, at $1.77. The group expects a continued decline in revenue this year, in an uncertain economic context. Over the current financial year, comparable sales should therefore decline by 2 to 3%, a slightly more pronounced drop than expected. In the fourth quarter of the closed financial year, comparable sales corrected by 6.2%. In November, Lowe’s lowered its full-year forecast.
Macy’s (+3.3%), posted another quarter of declining sales, announcing revenues of $8.12 billion, down 2%, but slightly higher than expectations. Digital sales declined by 4%, while comparable physical sales corrected by 5.4%. The group still generated a profit of $685 million, higher than expectations, while adjusted earnings per share were $2.45 versus around $2 consensus. For the year ended, revenues stood at $23.1 billion, for adjusted earnings per share of $3.50. The group says it expects an annual turnover lower than consensus, due to weak demand for its clothing and shoes. It also intends to close 150 stores by 2026 as part of its recovery plan.
AutoZone (+6.6%) posted sales growth of 4.6% to $3.9 billion in the second fiscal quarter of 2024, for a gross margin improving by 160 basis points to 53.9% and a net profit up 8% to $515 million. Earnings per share beat expectations, growing 17% to $28.89. Operating profit increased 11% to $743 million. The market consensus for the period was $26.3 adjusted EPS for $3.84 billion in revenue.
Li Auto (+11.7%), the Chinese manufacturer of electric vehicles is still climbing Wall Street! The title had already soared the day before by 18.8%. The group posted its first annual net profit and beat market consensus in the fourth quarter, despite the slowdown in demand. Li delivered 131,805 vehicles in the quarter ended, tripling its deliveries year-on-year. Quarterly revenues reached $5.88 billion, bringing the annual total to $17.44 billion. Net profit for the fourth quarter was $810 million, an increase of… +2,068% year-on-year! Non-GAAP net income soared 374% to $646 million. For its first fiscal quarter just started, Li expects deliveries ranging from 100,000 to 103,000 units, as well as revenues of 4.4 to 4.53 billion dollars (+66% to +71%).
JM Smucker (-2%), the American food group known for its peanut butter announced sales of $2.23 billion for the third fiscal quarter, slightly above the market consensus, for a gross margin improved to 36, 9%. Quarterly earnings per share were $2.48, versus $2.27 consensus. The group now expects an annual profit ranging from $9.45 to $9.65 per share, a revision at the high end of the previous guidance.
Expedia (+0.9%), the American online tour operator, announced its intention to cut around 1,500 positions, which corresponds to 9% of its workforce… Earlier this month, the group reported a managerial transition. The Seattle group will therefore cut its workforce and focus on investing in strategic priority growth areas. At last count, the group employed just over 17,000 people worldwide. Expedia’s results for the end-of-year holiday season disappointed this month, while the outlook was also lower than expected. Ariane Gorin, who heads the business division, will take over as general manager on May 13.
