On this Friday, the Four Witches session, Wall Street finished well. The S&P 500 is certainly in balance (4,719 points), but the Dow Jones ends the session not far from its all-time high reached in the last hour of trading, at 37,347.60 pts. The American index of industrial values gained +0.15% to 37,305 pts, bringing its increase to more than 12% since January 1. The Nasdaq takes another +0.35% to 14,813 pts, with a gain of +2.64% over the week, and has soared by +41.54% since the start of the year…
This week is completely green on these three indices in a context of optimism from investors welcoming the announcements from the Fed which is counting on three rate cuts next year, and the much more flexible comments from Jerome Powell. The ECB also opted on Thursday for a status quo, without promising a rate cut. The latest economic statistics in the United States support, for the moment, the thesis of a soft landing and an easing of inflation… Operators estimate the rate peak reached, while inflation seems to be under control according to the latest figures for consumer prices and production. As for the ECB, despite Christine Lagarde’s still quite firm speech, it is likely that there will no longer be any rate increases on the agenda.
John Williams, the head of the New York Fed, indicated this Friday that the American central bank had not started discussing a rate cut. According to John Williams, it would be premature to bet on monetary easing as early as March. He even adds that the Fed must be ready to raise rates further if necessary. On CNBC, Williams therefore tried to temper the enthusiasm of the markets, which had welcomed the Fed’s announcements on Wednesday and the much more flexible speech from Jerome Powell. “We’re not really talking about rate cuts at the moment,” Williams told CNBC. “We’re very focused on the question before us, which, as Chairman Powell said…is: Have we moved monetary policy to a tight enough stance to ensure that inflation comes back at 2%? He adds: “I think it’s just premature to think about it.” He stressed that the Fed would remain data-dependent and if the downward trend in inflation were to reverse, it would be prepared to tighten policy again.
On the economic front, the New York Fed’s Empire State manufacturing index collapsed to -14.5 in December, against a near-zero consensus and after a reading of +9.1 a month before. The December index therefore reflects a strong unexpected contraction in manufacturing activity in the region considered.
Industrial production for the month of November 2023 increased by 0.2% compared to the previous month, according to the Fed report. The FactSet consensus was at +0.3%, after a decline of 0.9% in October. Manufacturing production increased 0.3% from the previous month, compared to +0.4% FactSet consensus and -0.8% for the revised reading from the previous month. The production capacity utilization rate for the month of November stood at 78.8% (79.2% consensus and 78.7% a month earlier).
The preliminary Markit US Composite PMI for December came in at 51, compared to the FactSet consensus of 51.1 and 50.8 for the previous month. The manufacturing index stood at 48.2 and the services index at 51.3, against respective consensuses of 49.3 and 50.6.
On the oil side, a barrel of WTI crude fell by -0.1% to $71.6. The barrel of Brent is firm, with a gain of +0.48% to $76.97.
The dollar is stable at 0.9178 euros.
An ounce of gold ended at $2,019 (1,853 euros). Bitcoin is worth $39,128.
Values
* Costco Wholesale (+4.45% to $658.82). The distribution group published Thursday evening, for its first fiscal quarter, adjusted earnings per share of $3.58, compared to a consensus of $3.4 and $3.10 a year earlier. The group’s revenues totaled $57.8 billion, slightly above the market consensus and up +6% compared to the corresponding period last year. The American distribution group also indicated that it would distribute to shareholders an exceptional dividend of $15 per share, the group’s first “special” dividend since the end of 2020. For the quarter ended, Costco posted a net profit of 1.59 $ billion ($1.36 billion a year before). The exceptional dividend will be payable on January 12 to shareholders of record at the close of December 28. The aggregate payment amount will amount to $6.7 billion.
* Rivian (+1.78% to $22.83). The American designer of electric vehicles rose 14% last night to $22 on Wall Street, following the announcement of a commercial agreement with the telecom operator AT&T, which will acquire Rivian vehicles for its fleet. as part of a pilot program. It is not known how many vehicles AT&T would purchase. “We are excited to purchase Rivian electric vehicles for our fleet. This pilot project is another important step in our ongoing efforts towards sustainability, reducing our carbon footprint and embracing a cleaner future for our operations,” said Hardmon Williams, AT&T senior vice president of connected solutions. Last month, Rivian indicated that it was no longer required to sell its delivery vans exclusively to its shareholder Amazon.
* US Steel (+1.21% to $39.33). The American steel giant provided, on Thursday, an estimate of adjusted net profit per share for the 4th quarter of 2023 ranging from 20 to 25 cents, compared to a consensus of 19 cents. Q4 2023 adjusted Ebitda is expected to be around $250M.
* Lennar (-3.57% to $149.28). The American real estate developer published robust results for its 4th fiscal quarter and fiscal year 2023. For the 4th quarter, diluted earnings per share were $4.82 ($4.55 a year earlier), supported by the 19% increase in deliveries. New orders increased by 32% to 17,366 homes. Quarterly adjusted earnings per share were $5.17 ($4.64 consensus). Quarterly net profit was $1.4 billion, or $1.5 billion excluding adjustments. Quarterly revenues represented $11 billion ($10.2 billion a year earlier). For the full year, adjusted EPS was $14.25 and profit was $3.9 billion. Annual revenues totaled $34.2 billion ($33.4 billion consensus), with a gross margin of 23.3% and a net margin of 16.4%. The weak housing supply in the United States therefore still supports demand, despite the rise in credit rates.
* Darden Restaurants (-0.37% to $162.49). The American restaurant chain published financial results for its second fiscal quarter of 2024, ending at the end of November, in line with market expectations. Sales totaled $2.7 billion, an increase of +9.7% year-on-year, with an increase of +2.8% on a comparable restaurant basis. The group with the Olive Garden and LongHorn Steakhouse brands posted adjusted diluted earnings per share of $1.84, a sharp increase of 21% year-on-year. The consensus was $1.73 adjusted EPS for $2.74 billion in billings. For fiscal 2024, revenues are expected at $11.5 billion, with like-for-like growth of 2.5-3%, for adjusted EPS from continuing operations ranging from $8.75 to $8.90.
