Wall Street appeared hesitant on Wednesday, despite the surges of Tesla and Boeing. Investors especially clung to offensive comments from Tesla management, even though the group’s latest results came out well below expectations. Enough to raise the title by 12% at the close of the market. The S&P 500 rose modestly by 0.02% to 5,071 pts, while the Dow Jones lost 0.11% to 38,460 pts. The Nasdaq advances 0.10% to 15,712 pts.
The slightly less dynamic statistics in the United States, with American PMI indices in particular under pressure, have revived hopes of a rate cut in recent days.
On the Nymex, a barrel of WTI crude lost 0.4% to $83. The dollar index gained 0.2% against a basket of currencies.
New orders for durable goods in the United States for the month of March 2024 increased by 2.6% compared to the previous month against 2% of the FactSet consensus. The increase for the previous month was revised to +0.7% against +1.4% for the initial estimate. Excluding transport, these orders for durable goods increased by 0.2% month on month, in line with expectations, after an increase of 0.1% in February.
According to the US Department of Energy, crude oil inventories in the United States for the week ending April 19, 2024 were down sharply by 6.4 million barrels compared to the previous week. Gasoline stocks declined by 0.6 million barrels. Stocks of distilled products finally increased by 1.6 million barrels.
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 98% chance 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 85%. It is possible 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 (60% ‘proba’ d an unchanged range on the fed funds rate).
Values
Tesla soars 12% on Wall Street, despite quarterly results even worse than expected. The Texan automaker, victim of slowing demand and tough competition, particularly in China, posted adjusted earnings per share of 45 cents in the first fiscal quarter compared to a consensus of 52 cents. Revenues came in at $21.3 billion versus the consensus of $22.3 billion. Net profit fell by more than half to $1.13 billion, while revenue corrected 9% year-on-year. This is the largest drop in the group’s activity since 2012, even surpassing the decline of 2020 in the midst of the Covid-19 pandemic.
Elon Musk, however, galvanized the crowds last night by indicating that plans for more affordable vehicles would materialize sooner than expected. Thus, Tesla now plans to begin production of a cheaper EV model from the start of 2025. For the moment, the group is forced to reduce its prices in the face of less dynamic demand than expected and a increased competition. It therefore took all of Musk’s magic to restore hope to the markets. The head of Tesla, SpaceX and The group previously considered such production in the second half of 2025… Musk also touted Tesla’s investments in artificial intelligence infrastructure and said the group was in talks with “a major automaker” about granting of a license for its driver assistance system marketed in the United States under the name FSD option.
The reactions of brokers today are quite mixed, with some positive opinions. Bank of America, in particular, has just revised its recommendation on the value from ‘neutral’ to ‘buy’ with a target price of $220.
Texas Instruments (+5.6%), the American giant of semiconductors intended for the mobile telephone industry, has more than convinced Wall Street. TI posted GAAP earnings per share for its first fiscal quarter of $1.20 (-35%) versus $1.08 consensus, for revenues of $3.66 billion (-16%) compared to a consensus of 3.61 billion. Operating profit fell 34% to $1.29 billion. Net profit declined 35% to $1.11 billion.
TI delivered fairly strong guidance for the current quarter, indicating a potential better trend for components for the industrial and automotive markets. Sales in the second quarter could reach up to $3.95 billion, compared to a consensus of $3.78 billion. Earnings per share are expected between $1.05 and $1.25 for the quarter, compared to a consensus of $1.17. Most customers in the company’s largest segment, industrial equipment, have completed their inventory reduction efforts, according to Bloomberg, adding that some are still going through the process. This is leading to an uneven recovery in demand, according to financial director Rafael Lizardi, cited by Bloomberg.
Visa (+0.3%). The American credit card giant posted revenues for its second fiscal quarter ending in March that grew 10% year-on-year, to $8.8 billion, slightly above market expectations. The operating margin was 61%, down 6 percentage points. Adjusted earnings per share were $2.51 versus the Bloomberg consensus of $2.44. Quarterly adjusted profit climbed 17% to $5.1 billion. Credit card spending in the US market increased 6.2% year-over-year. Global payment volumes increased by 8%. The group expects revenue growth of 10-14% for the current quarter.
Seagate (+0.6%), the hard drive giant posted adjusted earnings per share of 33 cents in the third fiscal quarter of 2024, compared to a consensus of 27 cents and a loss of 28 cents a year before. Quarterly revenues totaled $1.66 billion, compared to $1.86 billion for the comparable period last year. These revenues narrowly miss the consensus. Cash flow from operations was $188 million and free cash flow was $128 million. The group finally declared a quarterly cash dividend of 70 cents per share.
Mattel (+2.4%). The toy maker narrowed its losses in the first quarter. The Californian group revealed last night an adjusted loss per share of 5 cents, compared to 24 cents a year earlier. Analysts feared a deficit of 12 cents per share according to consensus. Quarterly revenues fell by 1% to $809 million. The Hot Wheels segment, however, grew 5%, offsetting weakness in other products. The group is counting on an improvement in profitability this year, for fairly stable sales of around $5.44 billion.
Thermo Fisher Scientific (+0.4%) raised its profit forecasts with demand for medical equipment. The Massachusetts group expects annual adjusted earnings per share ranging from $21.14 to $22.02, compared to a previous range of $20.95 to $22. The consensus was $21.5. Over the closed quarter, the group generated adjusted earnings per share of $5.11, for revenues of $10.35 billion. The consensus was for $4.7 adjusted EPS and $10.2 billion in revenue.
AT&T (+1.8%), the American telecom operator, exceeded expectations in terms of subscriber additions and free cash flow over the past quarter. However, revenues were only $30 billion, compared to the consensus of $30.5 billion. Free cash flow more than tripled to $3.1 billion, while it was expected at $2.5 billion.
Boeing (-2.8%). The group revealed for its closed quarter an adjusted loss per share of $1.13 compared to a FactSet consensus of approximately -$1.63. Revenues were $16.6 billion versus $16.3 billion consensus. They fell by 7.5% year-on-year. The group posted a loss of $355 million in the quarter ended, as it faces an unprecedented series of incidents and fears over the security of its devices. The net loss a year before was $425 million. On an adjusted basis, the operating loss was $388 million compared to $440 million a year earlier. Boeing said its cash burn in the first quarter was $3.9 billion, compared to a forecast of $4 billion to $4.5 billion in March.
Boston Scientific (+5.6%) climbs on Wall Street, as the group generated revenues of $3.86 billion for its first quarter of 2024, up 14%, with organic growth of more than 13%. . GAAP group share net income was $495 million and 33 cents per share, compared to $300 million in the comparable period last year. Adjusted earnings per share were 56 cents compared to 47 cents a year earlier.
General Dynamics (-3.9%), the American defense contractor, announced for its first quarter revenues of $10.7 billion, an increase of 8.6%, for an operating profit up 10.4%. to $1 billion and diluted earnings per share of $2.88, up 9.1%. Operating margin improved by 20 basis points to 9.7%. The total backlog was 93.7 billion, up 4.4%.
CME Group (-1.9%) posted first quarter revenues of $1.5 billion, operating profit of $960 million and net profit of $855 million. Diluted earnings per share were $2.35. Adjusted profit represented $911 million or $2.50 per share. Adjusted net profit and adjusted earnings per share thus reached records, despite economic and geopolitical uncertainty.
Humana (-3.6%), the American health insurer announced adjusted earnings per share of $7.23 for its first fiscal quarter. GAAP earnings per share for fiscal 2024 are expected to be around $13.93, compared to previous guidance of around $14.87. Annual adjusted earnings per share are expected to be around $16.
Biogen (+4.5%), the American biotechnology group, rebounds on Wall Street. The group exceeded market expectations for its first quarter, with spending reductions offsetting the impact of competition on its older treatments. In addition, the Alzheimer’s treatment developed with its Japanese partner Eisai, Leqembi, posted a tripling of its sales and the number of patients compared to the previous quarter. The group posted quarterly adjusted earnings per share of $3.67, compared to a consensus of $3.45.
Otis Worldwide (-3%), the elevator designer, posted revenues of $3.4 billion in the first quarter, an increase of 3%, quite close to market expectations, for a net profit of $353 million. up 7% and adjusted earnings per share of 88 cents, better than expected. The group raises its annual guidance for adjusted earnings per share to between $3.83 and $3.90. The target for share buybacks is set at one billion dollars.
