Wall Street appears close to its peaks this Monday, with the S&P 500 gaining 0.39% to 5,324 pts, the Dow Jones 0.13% to 40,054 pts and the Nasdaq 0.71% to 16,804 pts. The trend therefore appears rather favorable, for the time being, while the week will be mainly marked, Wednesday evening, by the quarterly results of the undisputed stock market star of recent months, Nvidia, the driving force behind the rally in artificial intelligence stocks. … Crude prices are hesitating below $80 today on the WTI, while an ounce of gold gains 0.3% to $2,424. The dollar index advances 0.1% against a basket of reference currencies.
On the Nymex, a barrel of WTI crude lost 0.1% to $79.6 despite geopolitical uncertainties in the Middle East and the announcement of the death of the Iranian president. Ebrahim Raïssi and his Minister of Foreign Affairs Hossein Amirabdollahian were killed in a helicopter accident that occurred on Sunday in a mountainous area while he was returning from a trip near the border with Azerbaijan, while we worried about the health of the king of Saudi Arabia. Saudi Crown Prince Mohammed bin Salman postponed his visit to Japan, which was scheduled to begin on Monday, due to a health problem with his father, King Salman, Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said.
Saudi Arabia is OPEC’s top producer and Iran the third, but there is no immediate sign that recent developments will lead to a change in oil supplies. In Europe, Ukraine continues its drone attacks against Russian refining sites, while an oil tanker bound for China was hit by a Houthi missile in the Red Sea on Saturday.
On the economic front on Wall Street, many Fed officials will be speaking throughout the week, starting this Monday with Raphael Bostic, Michael Barr, Christopher Waller and Philip Jefferson, then tomorrow Tuesday, Thomas Barkin, Christopher Waller, John Williams, Raphael Bostic and Michael Barr.
Michael Barr, Fed vice chairman for supervision, said today that he was disappointed with inflation data from the first months of the year, suggesting that rates should be given more time to reach levels current high levels to ensure that inflation is brought back towards the central bank’s objective. Thus, the inflation figures for the first quarter were disappointing and did not provide the official with the increased confidence hoped for to support the easing of monetary policy. The current restrictive policy should therefore be given more time. Barr also said the economy remained strong and the unemployment rate remained low. It would therefore be a question of leaving rates at their current levels to take the time to observe the evolution of conditions…
Raphael Bostic, president of the Atlanta Fed, for his part estimated that inflation should continue to fall this year and in 2025, but also judged that interest rates could remain above the levels observed during the last decade. On Bloomberg, Bostic noted that it would take time for inflation to return to target. He noted that the job market was a little less tight than 12 months ago but was not weak.
Remember that Jerome Powell, head of the Fed, set the tone last week by displaying his confidence and his determination to bring inflation back towards the 2% objective, even if this could be done at the cost of maintaining it more long-than-expected rates at a 23-year high, between 5.25 and 5.50%.
Philip Jefferson, vice-president of the Fed, indicated for his part that restrictive monetary policy had weighed on the real estate market. He judged that rates were in (sufficiently) restrictive territory and that April consumer price inflation data was encouraging. According to him, it is a question of evaluating future data to measure the balance of risks and implement the appropriate monetary policy. Jefferson judges for the moment that the economy is growing at a solid pace and that employment also remains robust. Long-term inflation expectations show that Americans believe the Fed is capable of achieving its 2% target. Jefferson expects consumption to grow at a slower pace later this year. The official sees a better balance in the labor market and a decline in inflation, but this remains far from what is desired and progress is slower than expected…
The FedWatch tool shows an additional Fed status quo probability of more than 96% on June 12, after the next meeting. This status quo should persist in July according to this same tool (more than 74% ‘proba’), but the Fed could then relax its policy from September or November. Obviously, as the Fed has often emphasized, monetary policy remains very dependent on new economic data. The latest consumer price figures last week were reassuring, but nothing says that this trend is sustainable…
There will be no significant statistics on Wall Street before Wednesday, with existing home sales, the Atlanta Fed’s inflation index, the weekly report on US domestic oil stocks or even the FOMC Minutes. .
Jobless claims, the Chicago Fed’s national activity index, the US composite flash PMI, new home sales and the Kansas City Fed’s manufacturing index will be released on Thursday. Durable goods orders and the University of Michigan Consumer Sentiment Index are due Friday.
In corporate news on Wall Street, Li Auto publishes before market this Monday, while Palo Alto Networks, Trip.com, Keysight, Zoom Video Communications and Nordson announce their latest results after the close.
Lowe’s, AutoZone, James Hardie, Macy’s, Toll Brothers and Urban Outfitters are releasing Tuesday.
On Wednesday, Nvidia will take the spotlight after the close with its latest figures. PDD, TJX, Analog Devices, Synopsys, Target, Snowflake, Williams-Sonoma and VF Corporation also announce Wednesday.
On Thursday, operators will follow publications from Medtronic, Intuit, Workday, NetEase, Autodesk, Ross Stores, Dollar Tree, Deckers Outdoor, Burlington Stores, BJ’s Wholesale and even Ralph Lauren.
Values
Nvidia (+2%) is rising from its peaks on Wall Street this Monday, at $946. The stock has gained more than 90% this year and tripled over 12 months, with the continuing enthusiasm around artificial intelligence, a field in which Jensen Huang’s group is the key player. Nvidia will announce its financial results for the first fiscal quarter on Wednesday evening, after trading on Wall Street. The consensus is $5.57 in adjusted earnings per share and $24.6 billion in revenue for the period. It reached $5.92 in adjusted EPS and $26.6 billion in revenue for the following quarter.
The graphics and AI chip giant easily beat the consensus for the previous quarter, posting adjusted earnings per share of $5.16 compared to a consensus of $4.60, for revenues of $22.1 billion. dollars compared to a market consensus of 20.4 billion. Data center revenues were 18.4 billion, much higher than the consensus of 17.2 billion and up more than 400% from the previous year. Quarterly net profit soared by almost… 770% to $12.3 billion. The Santa Clara group thus achieved a turnover for the fourth quarter ended January 28, 2024 of 22.1 billion dollars, up 22% compared to the previous quarter and… 265% compared to Last year. For fiscal 2024, revenue increased 126% to $60.9 billion. Non-GAAP earnings per diluted share were $12.96, up 288%.
For the first fiscal quarter, the group then envisaged, in February, during the previous quarterly publication, revenues of 24 billion dollars, plus or minus 2%. Adjusted gross margin was expected at 77%, plus or minus 50 basis points.
Apple (+1%) has launched an aggressive price reduction campaign on its official Tmall site in China, Reuters understands. Thus, discounts of up to 2,300 yuan, or $318, would be offered on selected iPhone models, adds the agency, which recalls that the Californian Apple group must defend its position in the face of increased local competition from of players such as Huawei in the high-end segment. The promotional operation is scheduled from May 20 to 28 and would be more significant than that of February, since the highest price drop was then 1,150 yuan. This time, the highest discount would be offered on the iPhone 15 Pro Max 1TB, while other models would see significant price drops. Reuters notes, for example, that the base 128 GB iPhone 15 would be offered with a discount of 1,400 yuan.
Tesla (-1%) is working to appease some vehicle rental companies in Europe, after the automaker’s repeated retail price cuts caused the value of their fleets to plummet. Its slow service and costly repairs also reportedly irritated business customers. Thus, according to Reuters, Tesla would agree to price reductions on purchases of certain vehicles by professionals and would intend to improve its quality of service. These efforts would include unofficial discounts on the purchase of new cars if they are in stock and efforts to respond to service, repair and order complaints, after years in which fleet managers and companies leasing companies say Tesla ignored these problems. At least that’s what emerges from Reuters interviews with nine executives of major car leasing and rental companies, as well as a dozen corporate fleet managers.
Li Auto (-14%), the Chinese electric vehicle manufacturer, listed on Wall Street, posted declining net profit despite revenue growth. Revenue forecasts also came out lower than market expectations. In the first fiscal quarter, Li achieved revenues up 36% to 25.6 billion yuan, in line with expectations, with deliveries of 80,400 vehicles (+53%). Adjusted net profit, however, declined 10% to 1.28 billion yuan. The group now expects revenues ranging from 29.9 to 31.4 billion yuan for its second quarter, compared to a Bloomberg consensus of more than 38 billion. Deliveries are expected between 105,000 and 110,000 units over the period, again far from analysts’ expectations.
JP Morgan Chase (-1%) consolidates at its historic peak on Wall Street, after a gain of 19% this year and a jump of 48% over 12 months. Jamie Dimon’s banking group, a major beneficiary of last year’s regional banking crisis, has just raised its net interest income forecast to $91 billion at an investors’ meeting, compared to $89 billion. dollars in April and 88 billion dollars previously – excluding the markets division. Net interest income is the difference between the amount of interest banks earn on loans and the amount they pay to depositors. JP Morgan notably acquired billions in loans last year by absorbing First Republic Bank, an operation which visibly fueled the performance of net interest income.
