Wall Street ended the session in very light green this Thursday, despite significant corrections on the Micron, Levi’s and Walgreens files. The mood on the American market was cautious, awaiting the first Trump-Biden joust, which is taking place this evening in Atlanta ahead of the November presidential election. Investors are also temporizing while waiting for the next data on inflation.
At the close, the S&P 500 gained +0.09% to 5,482 pts. The Dow Jones is just as timid, with a gain of +0.09% to 39,164 pts. The Nasdaq is firmer, appreciating +0.3% to 17,858 pts.
As expected, American GDP for the first quarter of 2024 grew at a rate of 1.4% in final reading, compared to a previous estimate of 1.3%. The price index increased at a rate of 3.1% against 3% consensus. Personal consumption expenditure increased at a rate of 1.5%, compared to a consensus of 2%.
US orders for durable goods for the month of May, which have also just been revealed, increased by 0.1% compared to April, against a stable consensus. Excluding transport, orders fell by 0.1% against +0.1% consensus.
The balance of international trade in goods for the month of May showed a deficit of $100.6 billion, compared to a consensus of $95.6 billion and a revised reading of $98 billion for the previous month.
Preliminary wholesale inventories for May rose 0.6% from the previous month versus a consensus of 0.2%.
The National Association of Realtors’ U.S. home sales promise index posted a 2.1% decline compared to the previous month, compared to a +1% consensus measured by FactSet and -7.7% a month earlier.
Weekly jobless claims for the week ended June 22 came in at 233,000, compared with the FactSet consensus of 235,000 and the prior week’s revised reading of 239,000.
On the Fed side today, Atlanta branch boss Raphael Bostic confirmed that he favors a rate cut this year, potentially in the fourth quarter. According to him, inflation is going in the right direction, but we need to be sure that it is heading toward 2% before the initial rate cut.
Tomorrow, we’ll be watching household income and spending for May, as well as the associated core inflation index, closely followed by the Fed, but also the Chicago manufacturing PMI and the University of Michigan’s U.S. consumer sentiment index. The Fed’s Thomas Barkin and Michelle Bowman will also have their say.
The 31 major U.S. banks that participated in the Fed’s stress tests would all be able to withstand a severe global recession — implying they wouldn’t need to hold more capital. The results released yesterday show that these banks would have enough capital to absorb losses and continue lending in a two-year scenario in which the U.S. unemployment rate climbed to 10%, commercial real estate prices fell 40%, and the stock market plunged 55%. The simulation would still show a collective loss of nearly $700 billion in this worst-case scenario… “The goal of our test is to help ensure that banks have enough capital to absorb losses in a very stressful scenario,” said Michael Barr, the Fed’s vice chairman for supervision.
This group of large banks includes JP Morgan, Bank of America, Citigroup, Wells Fargo and Goldman Sachs. Even large regional banks, such as PNC, Truist, M&T Bank, Citizens and Regions, would have adequate levels of capital in this worst-case scenario.
On the oil side, a barrel of WTI crude gained +0.32% to $82.21.
The dollar gained +0.15%, trading at 0.9355 against the euro.
An ounce of fine gold ended at $2,326. Bitcoin recovered by +0.32% to $61,663.
Values
* Walgreens Boots Alliance (-22.16% to $12.19). The American pharmacy chain is plummeting on Wall Street. The Deerfield, Illinois-based group posted revenues up 2.6% to $36.4 billion for the third fiscal quarter ending at the end of May, with operating income back in positive territory at $111 million and adjusted operating income of $613 million, down 36%. Adjusted earnings per share fell 37% to 63 cents. The consensus was for adjusted EPS of 68 cents for revenues of $35.9 billion. The group is reducing its guidance for adjusted earnings per share for fiscal 2024 to between $2.80 and $2.95, to reflect difficult trends in the pharmaceutical industry and a “worse than expected” consumer environment in the United States.
* Levi Strauss (-15.4% to $19.56). The denim giant’s stock is falling after the announcement of lackluster results for the second fiscal quarter. Adjusted earnings per share came in at 16 cents in the period, above market consensus, but revenue missed consensus at just $1.44 billion. Levi Strauss also announced an 8% increase in its dividend to 13 cents per share. Sales grew 8% year-on-year with the favorable basis of comparison. Levi’s maintained its annual forecast, expecting earnings per share ranging from $1.17 to $1.27, including an impact of 5 cents from the new distribution and logistics strategy. Finally, note that online sales increased by 19% year-on-year in the quarter ended.
* Micron (-7.12% to $132.23). Despite quarterly results that exceeded expectations, the group’s guidance, which was just in line, disappointed, while the stock had been up more than 70% this year and was at its highest ever. The penalty highlights the market’s very strong expectations regarding stocks linked to the theme of artificial intelligence.
The memory chip leader estimates that its fourth-quarter revenue should come in between $7.4 billion and $7.8 billion, compared to a consensus of around $7.6 billion. Adjusted earnings per share for the period are expected at around $1.08 compared to $1.02 consensus. The group is obviously benefiting from the very strong demand in AI markets, but is still struggling in its traditional markets, PCs and smartphones. In the third fiscal quarter ended at the end of May, the group still posted very strong growth of 82% year-on-year, to $6.81 billion, while its adjusted earnings per share, of 62 cents, largely beat the consensus which was 50 cents. The group notably sells a key component of AI hardware, HBM high-bandwidth memory, which works with Nvidia chips to process data and helps systems develop and run AI models.
* Nvidia (-1.91% at $123.99). The AI chip specialist held its general meeting yesterday. A Wall Street star in 2023 and early 2024, the group briefly became the world’s largest stock market capitalization last week. With particularly dynamic demand for its products essential to the development of artificial intelligence models, it is now worth more than $3,000 billion. Jensen Huang, the group’s CEO, said at the AGM that the Blackwell platform expected later this year will probably become the most successful product in Nvidia’s history, and perhaps even in the entire history of computing.
* McCormick (+4.33% to $70.6). The American seasoning and spice giant announced sales for its second fiscal quarter ending at the end of May, down -1% to $1.64 billion, compared to a consensus of $1.63 billion. Quarterly adjusted earnings per share of 69 cents came in above market expectations. The group confirmed its expectations for sales, operating profit and adjusted earnings per share for the 2024 financial year. It forecasts that adjusted earnings per share for 2024 will be between $2.80 and $2.85, compared to $2.70 of adjusted earnings per share in 2023. For fiscal 2024, the company expects strong cash flow driven by earnings and working capital initiatives and plans to return a significant portion of cash flow to shareholders under form of dividends.
