All the lights remained firmly anchored in the green this Friday on Wall Street. The S&P 500 gained +1.23% to 4,839 pts. The Dow Jones climbs +1.05% to 37,863 pts. The Nasdaq is once again very firm, registering a nice rebound of +1.70% to 15,310 pts. The American market benefited on Thursday from a sharp rise in the Nasdaq, in the wake of Apple, Nvidia, and the entire ‘chip’ segment. The trend was confirmed this Friday.
Atlanta Fed President Raphael Bostic on Thursday urged monetary policymakers to proceed with caution given the potential impacts of unpredictable events, from elections to global conflicts. Philadelphia Fed boss Patrick Harker said he expected inflation to continue to fall toward the 2% target. He judges that the first rate cut should take place in the 3rd quarter, to ensure that inflation returns to where it should be.
Goolsbee said the continued decline in inflation warranted a discussion on lowering rates, but he also added that decisions would be made meeting by meeting. So, it would still be too early to say when rates will fall. Sowing confusion, the official also noted that if progress on inflation “reversed”, that would merit… rate increases!
These speculations and indiscretions on the evolution of key rates will cease, since the “blackout” period preceding the Fed’s monetary meeting on January 30 and 31 begins this evening. During this time of silence, which runs from January 20 to February 1, officials of the American central bank will no longer be able to speak. Obviously, he does not join Jerome Powell’s press conference on January 31.
Regarding rate expectations, the CME Group’s FedWatch tool now shows a 97% probability that the Fed will opt for a status quo on January 31 at its next meeting. The probability of a quarter-point rate cut on March 20, following the next meeting, is around 52%.
This Friday across the Atlantic, resales of existing homes in the United States for the month of December 2023, measured by the National Association of Realtors, stood at a rate of 3.78 million units, down 1%. compared to the previous month and 6.2% over one year. The FactSet consensus was 3.82 million units.
The preliminary US consumer sentiment index for January 2024, measured by the University of Michigan, came in at 78.8, compared to the FactSet consensus of 69.5 and 69.7 for December 2023. The measure of inflation expectations for the coming year stood at 2.9% in January (3.1% consensus and 3.1% in December).
A barrel of WTI crude fell -0.66% to $74.42.
The dollar is stable against the euros, at 0.918 euros.
An ounce of gold ended stable at $2,029. Bicoin lost -0.16% to $41,227.
Values
* The Travelers Companies (+6.77% to $211.73). The American group active in insurance is climbing on Wall Street, having just published a 4th quarter which it describes as excellent. Quarterly net income was a record $6.99 per share on a diluted basis, while adjusted earnings per share reached a record $7.01. Annual net income was $2.99 billion, or $3.07 billion on an adjusted basis. Over the closed quarter, this net profit stood at $1.63 billion in consolidated data and on an adjusted basis. The group also mentions an “exceptional” consolidated combined ratio, up 8.7 percentage points to 85.8%.
* Huntington Bancshares (+3.92% to $12.72). The US regional bank reported a drop of more than 60% in its 4th quarter profit, with a charge of $214 million linked to the replenishment of the FDIC government deposit insurance fund and a drop in net income from interest of 10% to $1.32 billion. The group expects an increase or decrease in net interest income of up to 2% in 2024. For the quarter ended, net profit stumbled to $243 million ($645 million a year earlier).
* Fifth Third Bancorp (+2.92% to $34.21). The American banking establishment published diluted earnings per share of 72 cents for its fourth fiscal quarter ($1.01 a year earlier). Net interest income declined to $1.42 billion ($1.58 billion a year earlier). Net profit attributable to common shareholders fell 30% year-on-year to $492 million. The average level of deposits increased by 2% compared to the previous quarter and by 5% compared to last year. The group also warns of an expected drop in net interest income in 2024.
* SLB (+2.24% to $49.66). The oil services colossus climbs on Wall Street following its quarterly publication. Revenues for the 4th quarter totaled nearly $9 billion, an increase of 8% compared to the previous quarter and 14% compared to last year. Adjusted earnings per share were 86 cents, up 10% sequentially and up 21% from a year ago. The consensus was for 84 cents in quarterly adjusted earnings per share on $8.96 billion in revenue. The group also reported quarterly generation of cash flow from operations of $3.02 billion and free cash flow of $2.28 billion. The board of directors approved a 10% increase in the quarterly dividend to $0.275 per share.
For the closed financial year, Schlumberger posted revenues of $33.1 billion, an increase of 18%, for adjusted earnings per share of $2.98, an increase of 37%. The group’s annual net profit increased by 22% to $4.2 billion. “In 2024, we will experience another year of strong growth driven by international markets,” indicates management, which therefore anticipates further growth driven by production systems, reinforced by the additional subsea opportunities of the OneSubsea joint venture.
* State Street (+2.03% to $75.82). The American financial institution published for its 4th fiscal quarter earnings per share of $2.04 excluding items and revenues of $3.04 billion, up +13% sequentially but down -4% in comparison. from last year. The consensus adjusted earnings per share was $1.83. Revenues also beat consensus, which was $2.95 billion.
* Meta (+1.95% to $383.45). The former Facebook is spending billions of dollars on Nvidia chips (+4.17% to $594.91), according to CNBC, which quotes an Instagram Reels publication in which Meta CEO Mark Zuckerberg said that the company would have… 350,000 Nvidia H100 graphics cards by the end of the year, although it does not indicate how many Meta has already purchased. CNBC reports that at the low end of the estimated price range for the H100 chips, Meta would end up spending $9 billion on GPUs, which are key to Meta’s research in generative artificial intelligence.
Mark Zuckerberg also clarified his intention to bring the AI research team closer to that of business-oriented generative AI. The development of infrastructure to meet demand would therefore be very rapid. Taking into account Nvidia chips and equivalent products from other suppliers, the group could have 600,000 GPUs at the end of the year. Meta had previously indicated a few weeks ago that it might also buy competing AMD chips. In addition, Zuckerberg’s group is reportedly working on the design of a GPU itself. Finally, Meta would form a new version of the Llama model of language.
* Apple (+1.55% to $191.56). Pre-orders for Apple’s Vision Pro headset began this Friday in the United States, for the modest sum of $3,499. The product is therefore put on sale on the Apple group’s website and its mobile application, while deliveries to stores and consumers will begin on February 2. Bloomberg notes that “the purchasing process will be unique,” since customers will have to use a recent iPhone or iPad “to scan their head and, if necessary, provide a visual prescription.” The agency recalls that the Cupertino group does not usually comment on the commercial performance of new products, but adds that the pre-order process could provide some indications. So if buyers are offered delivery times well beyond February 2, this may suggest that demand is strong – or that supplies are limited.
For this launch, Apple also unveiled two additional configurations: a version with 512 GB of storage for $3,699 and a high-end model with 1 terabyte of space for $3,899. The base model includes 256 GB of storage. Bloomberg notes that delivery dates for all three models quickly slipped toward the March 8-15 period for online orders, with devices sold out for in-store pickup on day one in many locations…
* Amazon (+1.2% to $155.34). AWS (Amazon Web Services) will invest 2.26 trillion yen or around $15 billion in Japan by 2027 to expand its cloud computing infrastructure supporting artificial intelligence services, reports Reuters. The Amazon unit will invest in expanding its facilities in metropolitan Tokyo and Osaka to meet growing customer demand, said the group, which had already invested 1.51 trillion yen between 2011 and 2022 to expand its cloud capacity in Japan. AWS also indicated that it provides generative AI services to large customers in Japan, including Nomura and Asahi.
* JB Hunt (+0.9% to $198.72). The American freight transport giant announced earnings per share of $1.47 for its fourth fiscal quarter ($1.92 a year earlier). Revenues totaled $3.30 billion, down -9.5% year-on-year, while the consensus was $3.24 billion. Quarterly operating profit fell 28% to $203 million. The group misses the margin and earnings per share consensus. For the year, revenues totaled $12.83 billion, down -13%, while diluted earnings per share fell -24% to $6.97.
* Citigroup (+0.8% to $51.52). The establishment will lay off more managers. Chief executive Jane Fraser held a conference with management on Thursday to discuss the bank’s reorganization plans, according to two sources familiar with the situation cited by Reuters.
* iRobot (-26.93% to $17.26). The stock is collapsing on Wall Street, while according to the Wall Street Journal, citing people familiar with the matter, the European regulator has decided to block the takeover of the designer of the Roomba robot vacuum cleaner. Amazon had offered $1.4 billion to get its hands on iRobot. Initial plans for this operation were revealed in August 2022, as the e-commerce giant sought to strengthen its portfolio of smart devices. The European Commission, European competition watchdog, has until February 14 to approve or not the transaction. However, according to the WSJ, the matter seems compromised. Indeed, Amazon was reportedly informed on Thursday during its meeting with Commission officials that the agreement was likely to be rejected. The e-commerce giant would not have proposed any solution before the January 10 deadline to address the regulator’s concerns that the agreement could restrict competition in the robot vacuum cleaner market.
* PPG Industries (-2.46% to $141.39). The American chemical group specializing in construction materials, paints and industrial coatings, published, for its 4th quarter, adjusted earnings per share of $1.53, compared to a consensus of $1.50 and a level of 1 .22$ a year earlier. Revenues were $4.35 billion, beating consensus by 2%, compared to $4.19 billion a year earlier. PPG expects 2024 adjusted earnings per share ranging from $8.34 to $8.59, compared to a market consensus of $7.7. Adjusted net profit for the quarter ended rose +27% to $363 million.
* Macy’s (-1.67% to $17.63). The American department store chain has indicated its intention to cut 2,350 jobs and close 5 of its stores, according to the Wall Street Journal. The job cuts represent 3.5% of the group’s workforce, while the retailer continues to adapt to the development of online commerce. However, spending aimed at improving the customer experience should be increased. The group will also strengthen automation.
