Wall Street lost ground on Monday, with GAFA and Intel… The S&P 500 dropped 0.31% to 5,218 pts, the Dow Jones lost 0.41% to 39,313 pts and the Nasdaq -0.27% to 16,384 pts . The week will be rather lively, with numerous interventions from Fed officials, as well as some notable statistics such as the revised GDP for the fourth quarter of 2023 (Thursday), or household income and spending with the ‘core PCE’ price index. ‘ (Friday). Note also that Jerome Powell, head of the Fed, intervenes on Friday…
On the Nymex, a barrel of WTI crude rose 1.8% to $82. An ounce of gold rose 0.8% to $2,179. The dollar index is up 0.2% against a basket of currencies while bitcoin is back at $70,000.
In terms of economic indicators, sales of new homes in the United States for the month of February stood at 662,000, compared to 680,000 in the FactSet consensus and 664,000 for the revised reading for the previous month.
The Chicago Fed’s national activity index for the month of February came in at +0.05, compared to -0.4 in the FactSet consensus and -0.54 a month earlier, in a revised reading. A positive indicator signals above-trend expansion.
Raphael Bostic, the head of the Atlanta Fed, stuck to his very cautious positions on Monday and anticipates only one drop in fed funds rates this year, compared to three downward adjustments, on average, for his colleagues… Bostic warns of the risk of premature monetary easing. He added that the rate cut will likely begin later than he had previously anticipated. He predicts a gradual slowdown in the economy and inflation. He also asserts that “we still find ourselves in a pandemic economy.”
Austan Goolsbee, the president of the Chicago Fed, quoted by Bloomberg, for his part foresees three rate cuts this year, but adds that it is still necessary to observe progress on the inflation front.
Lisa Cook, Governor of the Fed, indicated in a speech at Harvard that cutting rates too early could run the risk of entrenching inflation, while cutting too late could harm to the economy. She believes that a prudent approach to monetary policy could ensure the path towards a return of inflation to 2%. It also notes that disinflation was irregular, as expected.
On Tuesday, traders will track durable goods orders, the S&P Case-Shiller and FHFA home price indexes, as well as the Conference Board’s consumer confidence index and the Richmond Fed’s manufacturing index.
The weekly report on US domestic oil stocks for the week ending March 22 will be released on Wednesday. Christopher Waller of the Fed intervenes the same day.
On Thursday, the news will be busy, with revised US GDP figures for the fourth quarter, weekly jobless claims for the week ended March 23, the Chicago manufacturing PMI, the US consumer sentiment index from the University of Michigan’s Home Sales Promises Index, as well as the Kansas City Fed’s Manufacturing Index.
Finally, on Friday, investors will monitor the inflation index as part of the publication of the report on household income and spending. The balance of international trade in goods will also be revealed. Jerome Powell will also liven up the day… Wall Street will nevertheless be closed on Friday for Good Friday – but then open for Easter Monday.
In corporate news on Wall Street this week, McCormick and GameStop report tomorrow, Tuesday. Cintas, Paychex, Carnival, Rumble and Jefferies announce Wednesday. Walgreens Boots Alliance releases Thursday.
Values
Boeing (+1.3%) announces changes to its management… Dave Calhoun has announced his intention to leave his position as CEO at the end of 2024. Calhoun will continue to lead Boeing until the end of the year. The independent chairman of the board of directors, Larry Kellner, announced his decision not to stand for re-election at the annual meeting. Steve Mollenkopf, on the board since 2020 and previously CEO of Qualcomm, is appointed as new president, succeeding Kellner. In this role, he will be responsible for leading the selection process for the group’s new CEO. Stan Deal, President and Managing Director of Commercial Airplanes, is retiring, while Stephanie Pope is appointed Managing Director of Commercial Airplanes.
United Airlines (-3.4%) is losing ground, while the American federal aviation authority, the FAA, intends to strengthen its supervision of the group. The FAA is investigating safety compliance following recent incidents.
Intel (-1.7%) and AMD (-0.8%) are declining, while according to the Financial Times, China intends to do without chips from the two groups in government PCs and servers. The FT reported over the weekend that Beijing had introduced guidelines to phase out US chips from these companies and also wanted to sideline Microsoft’s Windows and foreign-made database software in favor of national options. Microsoft drops almost 1% before market…
China is thus trying to reduce its dependence on foreign companies by developing its local semiconductor industry, while the country is the victim of American restrictions on technology exports and in particular cutting-edge chips adapted to AI . Reuters notes that China was Intel’s largest market in 2023 with 27% of revenue, while AMD derived around 15% of its sales from the country…
Nvidia, on the other hand, gained 0.7% for a capitalization of around 2,400 billion dollars. However, Reuters indicates that a coalition including Alphabet (Google), Intel and Qualcomm would consider fighting against the currently overwhelming domination of Jensen Huang’s group in the market for artificial intelligence chips. Starting with an Intel-developed technology called OneAPI, the UXL Foundation, a consortium of technology companies, plans to create a suite of software and tools capable of powering multiple types of AI accelerator chips, they told Reuters the leaders involved in the group. The open source project aims to make computer code run on any machine, regardless of the chip and hardware powering it.
Apple (-0.8%), Meta (-1.2%) and Alphabet (-0.4%) are correcting their situation on Wall Street, following the European Union’s antitrust offensive. Thus, the European competition services will investigate the three American technological giants, while the measures implemented by these groups would not comply with the obligations of the digital markets regulation (DMA). The European competition authority will examine in particular Alphabet’s rules regarding Google Play and “self-preference” in Google search, Apple’s rules on piloting in the App Store and the choice screen for Safari, as well as Meta’s payment or consent model. The Commission also intends to study Apple’s new pricing structure for alternative application stores.
Amazon’s ranking practices (+0.4%) on its marketplace are also in the sights of the European antitrust regulator… The investigations must be finalized within a year and could result in fines significant.
Apple. The Vision Pro mixed reality headset from the Californian group from Cupertino should be released this year in mainland China. At least that’s what the general director of the Apple group, Tim Cook, committed to yesterday Sunday, quoted by local media.
