Wall Street, after a particularly trying stock market week for the technology rating, recovered slightly this Monday, the S&P 500 gaining 0.25% to 4,980 pts, the Dow Jones 0.20% to 38,062 pts and the Nasdaq 0.15 % at 15,304 pts. The relative easing of geopolitical tensions in the Middle East seems to be somewhat reassuring. The week will be particularly lively, with many notable statistics, but also and perhaps above all several essential quarterly publications, including those from technology giants Microsoft, Meta, Tesla and Alphabet… On the Nymex, the barrel of WTI crude loses 0 .4% to $81.9. An ounce of fine gold lost 2.4% to $2,356. The dollar index gained 0.1% against a basket of reference currencies.
First on the economic front, the Chicago Fed’s national activity index for March 2024 stood in positive territory, indicating “above-trend” expansion. The index stood at 0.15, compared to 0.05 a month earlier. The FactSet consensus was 0.30 for March.
The US composite flash PMI, new home sales and the Richmond Fed manufacturing index will be announced tomorrow. Durable goods orders and the weekly report on US domestic oil stocks will be released on Wednesday. The US GDP for the first quarter, the balance of international trade in goods, weekly unemployment claims, as well as promises of housing sales and the manufacturing index of the Kansas City Fed, will be followed on Thursday. Household income and spending as well as the core PCE inflation index will be monitored on Friday, as will the University of Michigan Consumer Sentiment Index.
However, there will be no intervention from Fed officials this week, in the run-up to the monetary meeting on April 30 and May 1, which should result in a new status quo. According to the CME Group’s FedWatch tool, there is a greater than 96% probability that the Fed will leave rates unchanged in a range of 5.25 to 5.5% on May 1. The probability of a comparable range of 5.25-5.5% on June 12, at the end of the next FOMC meeting, stands at 83%. It has risen sharply following recent inflation figures, raising fears of a lastingly high level of prices in a context of a resilient economy. It is possible, however, that the Fed will be able to lower its rates on July 31, at the end of the next meeting, but the highest probability for the moment is still that of a status quo (56% ‘proba’ of an unchanged range on the fed funds rate).
Note also that the New York Stock Exchange, the NYSE, is questioning market participants on the advantages of trading stocks 24/7, according to the Financial Times. The NYSE study, which is owned by Intercontinental Exchange, is believed to be an initiative of the data analytics team rather than management.
Verizon Communications, Cadence Design Systems, Truist Financial Corporation and Nucor release their quarterly financial results on Monday.
PepsiCo, GE Aerospace, Danaher, Philip Morris International, RTX, UPS, NextEra Energy, Lockheed Martin, Fiserv, Sherwin-Williams, Freeport-McMoran, Spotify, General Motors, Kimberly-Clark, Halliburton and PulteGroup, announce pre-market results tomorrow , while Visa, Tesla, Texas Instruments, Chubb, Baker Hughes, Seagate and Steel Dynamics publish after the close.
Thermo Fisher Scientific, AT&T, Boeing, Boston Scientific, General Dynamics, CME Group, Amphenol, Norfolk Southern, Hilton Worldwide, Humana, Biogen and Otis Worldwide, will announce before market Wednesday, while Meta, IBM, ServiceNow, Lam Research, Waste Management , Chipotle Mexican Grill and Ford will reveal their latest figures after the market close.
Microsoft and Alphabet will dominate business news Thursday evening on Wall Street with their respective quarterly reports. Merck, T-Mobile US, Caterpillar, Comcast, Intel, Union Pacific Corporation, S&P Global, Honeywell, Bristol-Myers Squibb, KLA Corporation, Gilead Sciences, Altria, Northrop Grumman, Valero, Capital One Financial, Hess, Edwards Lifesciences, Newmont , Dow Inc, Nasdaq Inc and Royal Caribbean Cruises, also report Thursday.
ExxonMobil, Chevron, AbbVie, HCA Healthcare, Colgate-Palmolive, Phillips 66, Roper, Centene and Charter Communications will finally announce their latest results on Friday.
Values
Tesla stumbles by another 4% on Wall Street, after having already lost more than 40% since the start of the year. Victim of tough competition, particularly in China, and weakening demand, Elon Musk’s group announced last week a reduction in its workforce of more than 10%. The Texan EV manufacturer’s workforce reached more than 140,000 people at the end of 2023. In addition, the group is further lowering its prices. The price of the Model 3 first version has been reduced by 3,000 euros to 39,990 euros, according to data from the group’s website noted this Monday by Reuters. The price of the Model 3 in Germany increased from 42,990 to 40,990 euros. In China, the vehicle’s starting price was lowered by 14,000 yuan ($1,930) to 231,900 yuan, Reuters notes. Tesla is not alone, since in China, Li Auto has also just reduced its prices. U.S. prices for Model Y, X and S vehicles were reduced by $2,000 on Friday. On Saturday, Tesla also reduced the price of its fully autonomous driving assistance software, from $12,000 in the United States to $8,000.
Tesla is due to release its first quarter financial results tomorrow evening, after Wall Street closes. Earlier this month, the group warned of a decline in global deliveries for this period, the first decline in four years reflecting weaker demand. Tesla could reveal a 40% drop in its quarterly operating profit tomorrow, Bloomberg indicates. Revenues are expected to decline for the first time in four years. The group is now banking on its autonomous robotaxi concept, and investors will therefore be watching Musk’s comments on the subject tomorrow evening. In the meantime, plans for the $25,000 consumer vehicle have been postponed.
Salesforce (+1%) and Informatica (-9%) would struggle to agree on the terms of their possible merger. Negotiations have reportedly cooled, with the two parties having difficulty agreeing on the terms of the deal, according to a person familiar with the matter cited by Bloomberg. In particular, the two groups would have been unable to agree on the buyout price. The Wall Street Journal reported yesterday that talks on a deal had stalled. Informatica Group’s market capitalization at Friday’s closing prices was $10.4 billion, after an increase of more than 30% this year. Remember that Salesforce has a good history of external growth, with already the acquisition of Slack in 2021 for more than 27 billion dollars, or the purchase of Tableau Software in 2019 for around 15 billion.
Nike (stable), the American sports shoe giant, will lay off around 740 employees from its global headquarters in Oregon, according to a letter published Friday and relayed in particular by Reuters. The sports equipment manufacturer thus intends to reduce its expenses, after a decline in turnover for the first fiscal half-year. This “second phase of impact” would begin on June 28 at the headquarters, said Michele Adams, vice president of ‘people solutions’ for the group, in a notice to state authorities. Nike employed around 83,700 people worldwide at the end of May 2023. The group announced in December a savings plan of $2 billion over three years, then indicated in February that it was going to cut around 2% of its workforce, i.e. almost of 1,600 positions.
Verizon (-3%), the American telecom operator, begins 2024 with growth in wireless services and solid cash flow generation. Quarterly adjusted earnings per share were $1.15, compared to $1.20 a year before and $1.12 market consensus. Operating revenues totaled $33 billion, up 0.2% year-on-year, compared to the first quarter of 2023, compared to $33.2 billion consensus. Consolidated net profit was $4.7 billion, compared to $5 billion for the corresponding period the previous year. Consolidated adjusted EBITDA was $12.1 billion, compared to $11.9 billion a year earlier. Wireless service revenues increased by 3.3% to 19.5 billion, in line with market expectations. Cash flow from operations was $7.1 billion in the quarter compared to $8.3 billion a year earlier.
Truist Financial (+1%), the American regional bank in Charlotte, announced for its first fiscal quarter an adjusted profit down 14%, with the drop in interest income and increased customer retention costs. Adjusted earnings attributable to common shareholders fell to $1.22 billion, or 90 cents per share, from $1.41 billion in the same period last year. Loans declined to $309 billion from $328 billion a year earlier. Net interest income corrected 13% to $3.43 billion. The establishment intends to refocus on its main banking activity. In February, Truist agreed to sell its remaining stake in its insurance brokerage business to a group of investors in a $15.5 billion transaction expected to close in the second quarter.
Nvidia recovers 2% after a 10% fall on Friday. However, the stock suffered a downgrade from ‘overweight’ to ‘neutral’ from the firm UBS, which also downgraded Microsoft (stable), Meta (-1%), Apple (stable), Alphabet (stable) and Amazon (stable).
