After a long phase of indecision, a few small index differences disrupted the close of markets on Wall Street this Monday. In calm trading volumes, the S&P 500 returned -0.20% to 4,550 pts. The Dow Jones conceded -0.16%, returning to 35,333 pts. Also, the Nasdaq turned red in the latest trading, with a limited decline of -0.07%, to 14,241 pts.
The equity markets are therefore consolidating, but the underlying sentiment remains supported by the recent easing of financial conditions, while operators are still playing the scenario of a peak in rates being reached and a controlled economic landing. This has led to a significant decline in bond yields, although the curves have inverted further and fuel debate over the ability of policymakers to achieve this soft landing. Central banks continue to promote the idea of higher rates for longer, while markets anticipate multiple rate cuts next year.
On the macroeconomic front, new home sales in the United States for the month of October 2023 stood at 679,000, well below the FactSet consensus which stood at 721,000. September sales were also revised significantly downwards, to 719,000 (759,000 previously estimated).
The Dallas Fed’s regional manufacturing index for the month of November 2023 stood at -19.9, compared to the FactSet consensus -16 and -19.2 a month earlier. The indicator therefore remains significantly below zero, which signals a sharp contraction in manufacturing activity in the region considered. The production index also comes out negative, at -7.2.
Online sales for this Cyber Monday in the USA could exceed $12 billion, with increased promotions, Adobe Analytics data estimating the performance between $12 and $12.4 billion. In the middle of the range, this would represent an increase of +8% compared to last year. A new historic peak was already reached last week for Black Friday, with online spending jumping +7.5%, reaching a record amount of $9.8 billion in the United States.
The week will be rich in macro data… Thus, the S&P Case-Shiller and FHFA house price indices will be known tomorrow, as will the Conference Board’s consumer confidence index and the Richmond Fed’s manufacturing index. On Wednesday, investors will follow the third quarter GDP figures (second estimate out of three), the balance of international trade in goods, the weekly report on domestic oil stocks, as well as the Fed’s Beige Book. Thursday, the day will be marked by the OPEC meeting, but also in the USA by the publication of weekly unemployment registrations, that of household income and expenditure, that of the Chicago PMI and that of promises for housing sales. On Friday, markets will track the final US manufacturing PMI and ISM manufacturing, as well as construction spending.
Elsewhere in the world this Monday, data showing a clear slowdown in the growth of industrial profits in China weighs on the trend. Profits at Chinese industrial companies rose for the third straight month in October, but growth slowed sharply, indicating that additional support measures from Beijing would be needed. The 2.7% year-on-year rise in profits in October marks a return to single-digit growth after an increase of 11.9% in September and 17.2% in August. Over the first 10 months of 2023, profits decreased by 7.8% compared to the previous year. The Chinese economy is therefore still struggling to recover after covid, due to problems in the real estate sector, local government debts, slow global growth and geopolitical tensions. Profits remain volatile and sensitive to input costs, particularly because of rising energy prices. Chinese authorities are encouraged to focus on expanding domestic demand. October data showed a contraction in new export and import orders, but growth in industrial production thanks to auto and restaurant sales. Profits vary significantly by sector, with a decline in furniture and an increase in electronics.
On the side of Europe and the ECB, Christine Lagarde judged, this Monday, that the weakening of inflationary pressures should continue, while adding that the medium-term inflation outlook remains “very uncertain”. This means that the European Central Bank must continue its fight against rising prices, the President of the ECB said on Monday during a speech to the Economic and Monetary Affairs Committee of the European Parliament.
Business news is more limited this week in the United States, after the wave of quarterly announcements. Operators will track any sales figures provided by retailers for Black Friday and Cyber Monday. Concerning the publication of results, Zscaler announces this Monday, after market, while the firms Intuit, Workday, CrowdStrike, Splunk, Hewlett Packard Enterprise and NetApp publish tomorrow evening.
Salesforce, Synopsys, Snowflake, Dollar Tree, Hormel Foods, PVH, Okta, Pure Storage or Donaldson Company, announced Wednesday. Dell Technologies, Marvell Technology, Johnson Controls, Kroger and Ulta Beauty, report Thursday.
On the oil side, the barrel of WTI crude has settled at $75.
The dollar is relatively stable against the euro, trading at 0.9127 euros.
An ounce of gold gained +0.58% to $2,014. Bitcoin is down -1.89%, preserving $37,000.
Values
* Crown Castle (+3.45% to $107.15). The American specialist in infrastructure management (towers) for mobile operators is climbing Wall Street, while activist investor Elliott Investment Management, one of the group’s main shareholders, intends to push for value-creating changes. The activist fund had already tried 3 years ago to put pressure on Crown Castle to obtain strategic developments concerning fiber infrastructure. The investor also criticized the shareholder return policy at the time. Elliott currently holds a stake worth around $2 billion in the capital of Crown Castle. The hedge fund says it is ready to present directors and is pleading for a change in management and board of directors, citing years of stock market underperformance. Elliott is still campaigning for a change in strategy regarding fiber, raising the possibility of selling this activity.
* Nvidia (+0.98% to $482.42). The file remains monitored, with a market capitalization of $1,191 billion. Nvidia has been the engine of the Nasdaq since the start of the year, but last week proved to be delicate despite high quality quarterly accounts, significantly higher than market expectations. Operators are especially concerned about Sino-American tensions and US restrictions on the export of advanced chips.
* Amazon (+0.67% to $147.73). The online sales group, according to the Wall Street Journal, has surpassed FedEx (-1.56% to $253.6) and UPS (-1.52% to $149.59) in terms of volumes of packages delivered. The private American leader in delivery would now be the Seattle group, which would eclipse the two specialists FedEx and UPS. The e-commerce leader delivered more packages to American homes in 2022 than UPS, after having eclipsed FedEx in 2020, and it would be, according to the WSJ, “on track to widen the gap this year”. US Postal, the American postal service, nevertheless remains the largest parcel service in terms of volume, handling hundreds of millions of parcels for the 3 companies. The WSJ notes that as recently as 10 years ago, Amazon was a major customer of UPS and FedEx, and that some incumbent executives and analysts scoffed at the idea that it could ever supplant them.
Before Thanksgiving this year, Amazon had already delivered more than 4.8 billion packages in the United States, and its internal projections predict that the group will deliver around 5.9 billion by the end of the year, according to documents consulted by the Wall Street Journal. Last year, Amazon shipped 5.2 billion packages. These numbers only include packages shipped by Amazon from start to finish. UPS and FedEx include in their counts packages that they hand over to the Postal Service for final delivery. UPS said its national volume this year likely won’t exceed last year’s 5.3 billion, which includes packages delivered to customers via the U.S. Postal. In the first nine months of this year, UPS processed approximately 3.4 billion packages nationally. FedEx Domestic Express & Ground package volume reached approximately 3.05 billion for the fiscal year ended May 31, 2023.
In addition, Reuters reports that Amazon has reached an agreement with most of its employees in Spain, avoiding a strike that could have taken place during one of the busiest days of the year. Reuters cites the Spanish union CCOO and the e-commerce group.
