Wall Street climbs this Tuesday, supported by Oracle and Nvidia. The markets seem to be reacting quite favorably for the moment to mixed US inflation figures. Operators are still closely monitoring the Nvidia file, which is very volatile following a sudden downward turn on Friday which caused the Nasdaq to fall. For now, the stock is trending up nearly 5% and back towards $900. The S&P 500 now gains 0.96% to 5,167 pts, while the Dow Jones gains 0.65% to 39,020 pts and the Nasdaq gains 1.29% to 16,225 pts.
Bitcoin reached new heights, up 6% over one week to nearly $72,000. On the Nymex, a barrel of WTI crude rose 0.7% to $78.4. An ounce of gold dropped 1% to $2,166. The dollar index gained 0.2% against a basket of currencies.
The week is especially marked in the United States by the consumer and producer price inflation figures. Note that the United States switched to summer time this weekend and that the Wall Street session will therefore take place from 2:30 p.m. to 9 p.m.
There were no notable statistics in the USA yesterday Monday. Things get serious this Tuesday with the American consumer price index for February 2024, which showed an increase of 0.4% compared to the previous month, against a FactSet consensus of +0.4%. Excluding food and energy, volatile elements, the February CPI also increased by 0.4% compared to January, while the consensus was +0.3%. Over one year, the consumer price index increased by 3.2%, or 3.8% excluding food and energy, against consensus estimates of +3.1% and +3.7% respectively.
The February budget deficit will be known at 7 p.m. (consensus -$238 billion).
Tomorrow, operators will follow at 3:30 p.m. the weekly report from the Department of Energy on domestic oil stocks, for the week ending March 8. Thursday, the program will be quite busy, with weekly unemployment registrations for the week ending March 9 (consensus 217,000, announcement at 1:30 p.m.), the producer price index for the month of February (same time, consensus +0 .3% compared to the previous month and +0.2% excluding food and energy; +1.1% and +1.9% year-on-year), as well as February retail sales (1:30 p.m., consensus +0, 8% compared to January, +0.5% excluding automobiles). Business inventories for the month of January will also be announced on Thursday.
Finally, on Friday, for Four Witches Day, investors will follow the New York Fed’s Empire State manufacturing index for the month of March (consensus -10), import and export prices for the month of February, industrial production numbers for February (consensus stable), and the University of Michigan’s preliminary consumer sentiment index for March (consensus 77.4).
According to the FedWatch tool this Monday, the probability that the Fed will leave its rates unchanged at the highest in more than 20 years on March 20, between 5.25 and 5.50%, on the occasion of its next monetary meeting, is located at 99%. The probability of an additional status quo on May 1, at the next meeting, reaches 91%. The probability of a first rate cut on June 12 remains substantial, while the ‘probability’ of status quo in June stands at 33%.
Among the major investment banks in the market, note that Bank of America has just raised its 2024 earnings per share estimate on the S&P 500 to $250, compared to $235 previously. This earnings per share could even reach $275 in 2025, estimates BofA. Goldman Sachs specifies for its part that risk assets should continue to grow, driven by strong economic growth in the United States and a slowdown in inflation. The macroeconomic environment would therefore be sufficiently positive to mask the high level of valuations, while underlying inflation should resume its decline… Finally, speaking on the occasion of an Australian summit, the boss of JP Morgan’s Jamie Dimon said he doesn’t think the Fed should start cutting rates in June. On the contrary, according to him, she should wait for more clarity before acting. “If I were in their place, I would wait,” Dimon said.
In corporate news on Wall Street, Oracle and Caseys General Stores released their quarterly financial results after market trading last night. Archer-Daniels and Kohl’s announce before market today. Lennar, Dollar Tree, Williams-Sonoma, UiPath and SentinelOne report Wednesday, while Adobe, Dollar General, Ulta Beauty, Wheaton Precious Metals and Dick’s Sporting Goods report Thursday. Jabil finally publishes on Friday.
Values
Oracle jumped 11% on the American stock market, to $127 for a capitalization of around $350 billion. The Texan business software giant has indeed pleasantly surprised with its quarterly financial publication and its outlook, which should propel the value to the highest level in its stock market history today. Total revenues for the fiscal third quarter rose 7.1% to $13.3 billion, in line with market expectations, while adjusted earnings per share were $1.41, up 16%. year-on-year, compared to a consensus of $1.38. Cloud revenue increased 25% to $5.1 billion in the quarter ended February. Cloud infrastructure (IaaS) revenues alone soared 49% to $1.8 billion.
The Austin group also reported a sharp increase in orders, with cloud activity. Thus, the backlog presented in the form of a “remaining performance obligation” reached 80 billion dollars at the end of the quarter (+29%!), well above analysts’ expectations, signaling significant growth potential with ” demand for our Gen2 AI infrastructure.” Safra Catz, CEO of the group, mentioned significant new cloud infrastructure contracts signed during the third quarter. She expects the group to continue to record such large contracts reserving cloud infrastructure capabilities. She adds that Oracle is opening new data centers very quickly to meet this demand. The group also specified that it would make an announcement with Nvidia, AI chip giant.
Casey’s General Stores (stable), the American neighborhood grocery chain, announced adjusted earnings per share of $2.33 for its third fiscal quarter, compared to a consensus of $2.20 and a level of 2, $36 a year ago. Revenues totaled $3.33 billion over the period, compared to analysts’ consensus of $3.49 billion. Quarterly net profit was $87 million, compared to $100 million a year earlier. For the 2024 fiscal year, the group envisages growth in Ebitda “in line with the objective of the long-term strategic plan of 8 to 10%”. The group plans to repurchase at least $100 million worth of shares throughout the financial year. Internal same-store sales are expected to increase 3.5% to 5%.
Archer-Daniels-Midland (+4%), the grain and raw materials trader, today adjusted its previous financial statements following an investigation into its accounting practices covering the period from January 2018 to September 2023. ADM says it has achieved earnings of $6.43 per share for the full year, after an investigation into the accounting practices of its nutrition division delayed the release of results. Archer-Daniels had cut its 2023 profit forecast in January and adjusted its outlook on the nutrition segment. The group also announced an internal investigation and placed its financial director Vikram Luthar on administrative leave. ADM finally says it is cooperating with the US Department of Justice, which has subpoenaed certain employees. For the fourth fiscal quarter of 2023, the group reports adjusted earnings per share of $1.06 and revenues of nearly $23 billion.
Kohl’s (-3%), the American mass distribution group, revealed sales for the fourth fiscal quarter down 1.1% in consolidated data and 4.3% on a comparable basis. Total revenues thus stand at $5.7 billion. Net profit represented $186 million, or $1.67 per share, compared to a loss of $273 million over the corresponding period last year. The consensus was for $1.28 in adjusted earnings per share on $5.7 billion in revenue. For the 2024 financial year, the group anticipates sales down by up to -1% or up by up to +1%. Like-for-like sales are expected to be stable or increasing by up to 2%. Operating margin is expected between 3.6 and 4.1%, while adjusted earnings per share are expected between $2.10 and $2.70.
New York Community Bank (+2%), the fragile American financial institution, has completed a billion-dollar fundraising round from a group of investors including former US Treasury Secretary Steven Mnuchin. NYCB therefore raises as expected a billion dollars from investors including Liberty Strategic Capital, a firm linked to Mnuchin, Hudson Bay Capital, Citadel Global Equities, Reverence Capital Partners, as well as other institutional investors and executives of the bank. The troubled regional bank also announced that former Comptroller of the Currency Joseph Otting would join the board and become its chief executive. Mnuchin, Milton Berlinski and Allen Puwalski are also appointed to the council, this board being reduced to ten members. The group will also carry out a three-to-one share consolidation.
Boeing (-4%). The US Federal Aviation Administration’s audit of Boeing’s 737 MAX production process after a panel explosion on an Alaska Airlines plane in January showed failure in 33 of 89 tests, it was reported yesterday Monday the New York Times. 97 cases of non-compliance were recorded. Supplier Spirit AeroSystems, which makes the MAX fuselage, passed six of 13 audits and failed the others. Additionally, an audit at Spirit of the door stopper component found five issues and one regarding the installation of the component failed. The audit raised concerns about the technicians who carried out the work and found that the company had “failed to determine the knowledge necessary for the operation of its processes”… Boeing also suffered yesterday on the stock market following a Wall Street Journal report that the US Department of Justice had opened a criminal investigation into the company. The Justice Department’s investigation will look into recent Boeing production and manufacturing incidents.
Tesla (-2%). Power has been restored to the manufacturer’s factory near Berlin. In contrast, Tesla’s Autopilot and FSD (Full Self Driving) features, as well as other driver assistance systems from rival manufacturers, have received mediocre ratings from the Insurance Institute of America for Highway Safety.
American Airlines (-4%) is losing altitude, the group now counting on an adjusted loss per share approaching 35 cents for its first fiscal quarter, at the bottom of the range of previous estimates. The increase in fuel costs explains this weakness. American Air now expects an average cost of $2.8 to $2.9 per gallon of jet fuel during the first quarter. Finally, the company however maintains its annual estimates. Southwest Airlines (-15%) also corrected on Wall Street today, the group having lowered its forecasts for receiving aircraft from Boeing. As a result, Southwest plans to reduce capacity and reassess its 2024 financial outlook.
