Wall Street lost ground on Wednesday, with the S&P 500 dropping 0.17% to 5,069 pts, the Dow Jones falling 0.31% to 38,949 pts and the Nasdaq losing 0.55% to 15,947 pts. Profit-taking prevailed following recent records and awaiting US inflation figures due on Thursday. A barrel of WTI crude stagnates at $78.50. The dollar index gained 0.1% against a basket of currencies. Bitcoin is still soaring above $63,000.
The second estimate out of three of US GDP figures for the fourth quarter of 2023 showed growth at a rate of 3.2% in the United States, compared to a consensus of +3.3% and a previous reading of +3 .3% also. Personal consumption expenditure increased at a rate of 3%, compared to 2.8% previously estimated. The index grew a little more than expected at +1.6% from one quarter to the next.
The balance of trade in goods in the United States for the month of January, which has also just been announced, showed a deficit of 90.2 billion dollars, against -88.1 billion consensus and -87.9 billion a months before.
Oil prices reduced their lead after the announcement of a sharp increase in crude reserves in the United States last week… According to the American Department of Energy, domestic crude stocks, excluding strategic reserves , increased by 4.2 million barrels during the week ended February 23 to 447.2 mb. The consensus was expecting an increase of 3.1 mb. Gasoline stocks fell by 2.8 mb (-1.5 mb expected), and those of distilled products fell by 0.5 million barrels (-2.1 mb expected).
On the American central bank side, Michelle Bowman, governor of the Fed, in turn estimated that it was “too early” to reduce rates. The official anticipates a continued decline in inflation with rates remaining at the current level. It says it will carefully monitor incoming data to assess the appropriate monetary posture. Bowman also noted several risks that could add to inflationary pressures, citing the repercussions of geopolitical conflicts, the easing of financial conditions or the still tense labor market…
“Nevertheless, if new data shows that inflation is moving steadily towards the 2% target, it will then become appropriate to gradually lower rates to prevent monetary policy from becoming too restrictive.”… That’s what Bowman said in his remarks during a speaking engagement for the Florida Bankers Association. From the manager’s point of view, however, this would not yet be the case.
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 77%. The first monetary easing could take place on June 12.
Values
Apple (-0.6%) has ended a decade-long effort to design an electric car, according to Bloomberg, citing people with knowledge of the matter. Thus, the Californian group from Cupertino would abandon one of its most ambitious projects. He reportedly made this announcement internally yesterday, surprising the 2,000 employees working on the project. The painful decision was shared by chief operating officer Jeff Williams and Kevin Lynch, vice president in charge of the effort, according to Bloomberg’s sources.
The two executives told staff that the project would therefore enter a sunset phase and that many employees of the automotive team – known as the Special Projects Group or SPG – would be transferred to the division… artificial intelligence, under the direction of John Giannandrea. These collaborators would therefore focus on generative AI projects, a major priority now for the Apple group. Apple’s automotive team also has several hundred hardware engineers and vehicle designers, who could apply for jobs on other teams. Bloomberg indicates that there would still be layoffs, without specifying the number. The decision to end the project “is a bomb for the company”, according to Bloomberg, which recalls that it is a multi-billion dollar effort, as part of Project Titan, which would have propelled Apple in a completely new industry.
Tesla (+1.1%). Elon Musk had fun on the social network next year. “Tonight, we radically increased the design goals for the new Tesla Roadster,” Musk said on X, adding that the production design of the sports vehicle would be completed and unveiled by the end of this year. Tesla announced the Roadster at the end of 2017, a four-seater electric vehicle, the launch of which was initially planned for 2020, before being pushed back to 2023 due to supply constraints.
Beyond Meat, the American producer of plant-based meat substitutes, soars by 30%! The group pleasantly surprised with its fourth quarter financial publication, posting revenues of $74 million over the period, certainly down year-on-year, but significantly higher than the consensus which stood at $67 million. The net loss, however, doubled to $155 million or $2.40 per share, while the adjusted loss per share was 92 cents, a little larger than the consensus expected. The Californian group is counting on an improvement in margins this year, with restructuring. He hopes to raise the bar in the United States with his new version of the ‘Beyond Burger’.
For the current financial year, revenues are expected between $315 and $345 million, compared to a consensus of $344 million and a level of $343 million in 2023. Above all, the gross margin is expected at 15-19 % in 2024, while it was negative last year.
eBay, the online auction giant, grew by nearly 8%, in quarters higher than expectations. Thus, the group posted adjusted earnings per share of $1.07 in the fourth quarter compared to a consensus of $1.03. Revenues were $2.56 billion, compared to $2.51 billion consensus. Gross merchandise volume increased 2% to $18.6 billion. The group also announced an increase in its dividend and a new authorization to buy back shares for $2 billion. For the first fiscal quarter just started, revenues are expected between $2.50 and $2.54 billion, in line with market expectations, while adjusted EPS is estimated between $1.19 and $1.23, largely above expectations.
TJX Companies (+0.6%), the American chain of stores announced for its fourth fiscal quarter diluted earnings per share of $1.22, up 37% year-on-year and well above the group’s estimates. Quarterly adjusted earnings per share increased by 26% to $1.12. Quarterly revenues totaled $16.4 billion, while like-for-like growth was 5% as transactions increased. Adjusted earnings per share were in line with market consensus, while revenues were slightly above expectations.
Baidu (-8%), the Chinese Internet giant, is losing ground on Wall Street. The group published a quarterly profit halved with significant expenses linked to artificial intelligence. Thus, profits declined by 48%, with the costs of training and developing the AI, to 2.6 billion yuan or approximately $361 million. Revenues increased by 6% year-on-year. The group’s AI model, Ernie, has attracted more than 100 million users. Quarterly revenue reached 34.95 billion yuan compared to 33.08 billion a year earlier. Adjusted net profit was 7.75 billion yuan, or 21.86 yuan per ADS. Adjusted Ebitda finally increased by 10% to 9.06 billion yuan. Note that revenues are at a record level, but remain below market expectations.
Bumble drops by 14.8%. The dating app reported mixed quarterly results, posting an adjusted loss of 19 cents per share in the fourth quarter, while analysts had expected a small profit. Revenue was $273.6 million. Analysts on average expected Bumble to report revenue of $275 million. Annual revenues still increased by 16% to 1.05 billion, while revenues generated by the Bumble application increased by 22% to 845 million dollars. The annual net loss was reduced to 2 million dollars compared to 114 million a year before. The group will also cut 350 positions, around 30% of its workforce.
Splunk (+0.3%) published surprisingly solid results on Wall Street. The data analysis software group, which is the subject of an acquisition offer from Cisco (stable) for $28 billion, posted revenues of $1.49 billion over the quarter compared to a consensus of 1.28 billion. Activity was supported by demand for cybersecurity software and cloud solutions. Total annual recurring revenue was $4.21 billion for the quarter ended January, an increase of 15% from last year. Quarterly adjusted earnings per share were $3.02 versus less than $2 consensus. Splunk also indicated that its merger with Cisco should be finalized towards the end of the current quarter or at the start of the second quarter of 2024.
UnitedHealth (-2.9%). The US Department of Justice has opened an antitrust investigation into UnitedHealth, according to the Wall Street Journal, which yesterday cited sources with knowledge of the matter. In recent weeks, investigators have reportedly questioned representatives of the health sector in sectors where UnitedHealth competes, including groups of doctors, indicates the WSJ. During the interviews, investigators looked into the relationship between the company’s UnitedHealthcare insurance unit and its health services arm Optum.
