The Wall Street market ended the session firmly anchored in positive territory this Monday. The S&P 500 jumped +1.41% to 4,763 pts. The Dow Jones gained +0.58% to 37,683 pts. The Nasdaq soars by +2.20% to 14,843 pts, notably boosted by the rebound of Nvidia. After a delicate first stock market week in 2024, the news remains mixed on the ‘Magnificent Seven’, notably Tesla and Apple who are nevertheless recovering…
Lorie Logan of the Dallas Fed (non-voter) emphasized the Fed’s quantitative tightening plans, saying the central bank should slow the pace as slower normalization reduces the likelihood that “QT” must stop prematurely if the bank is under stress and something breaks. Logan’s comments follow the December FOMC Minutes, in which officials suggested it would be appropriate to discuss the factors that determine the end of QT… Economists expect a formal announcement on QT at the March FOMC meeting and a slowdown starting in April. However, the timeline for the end of QT is uncertain, with some seeing bank liquidity strong enough to further reduce the balance sheet significantly over a year, while others see the Fed exercising more caution.
According to the CME Group’s FedWatch tool, it is very likely (95%) that the Fed will leave its rates unchanged on January 31 after its next monetary meeting, between 5.25 and 5.5%. The first relaxation could take place on March 20 during the next meeting (probability of more than 60%). The latest economic statistics showed, across the Atlantic, a fairly resilient job market but some additional signals of economic slowdown.
As for major market strategists, Michael Wilson of Morgan Stanley believes that American stocks will only continue their 2023 rally if economic growth resumes. Goldman Sachs strategy teams believe that company results could exceed expectations in 2024.
This Monday’s economic news is marked by a sharp drop in oil prices. A barrel of WTI crude fell -4.07% to $70.93. North Sea Brent plunged -3.36% to $76.25. Saudi Arabia lowered the official selling price of its oil for February on Sunday. State producer Saudi Aramco cut the price of its flagship Arab Light product to Asia by a larger-than-expected $2 per barrel due to continued weak demand.
The dollar lost -0.11% against the euro, trading at 0.913 euros.
An ounce of gold is stable at $2,028. Bitcoin fell slightly to $43,714.
Tomorrow Tuesday, American investors will follow the balance of international trade in goods and services. On Wednesday, wholesale stocks and weekly report on US domestic oil stocks will be monitored. The Fed’s John Williams will speak on Wednesday. The news will be a little more extensive on Thursday, with the American consumer price index for December, weekly unemployment claims, as well as the American budgetary balance. On Friday, markets will follow the producer price index and a speech from the Fed’s Neel Kashkari.
Values
* Nvidia (+6.43% to $522.53). The stock ended the session close to its all-time high ($522.75), and with a market capitalization of $1,290 billion. The group plans to launch, in the 2nd quarter of 2024, mass production of its new AI chip intended for China and complying with American rules on exports of advanced chips. According to Reuters, citing two people familiar with the matter, the H20 chip will be designed to comply with new US regulations on exports of high-tech equipment to China. Initial shipment volume will be limited and will primarily fulfill orders from major customers.
* Moderna (+3.89% to $115.44). The laboratory revealed preliminary annual sales of its Covid-19 vaccine above the lower limit of its guidance at $6.7 billion. The group intends to return to growth in 2025. In November, the laboratory indicated that it was forecasting revenues at the bottom of its forecast range. This $6.7 billion in preliminary sales includes approximately $600 million in deferred revenue related to Moderna’s efforts under the GAVI alliance.
* Apple (+2.42% to $185.56). The Apple brand is recovering despite analysts’ concerns at the start of 2024. After two downgrades of brokers last week (Barclays and Piper Sandler), Jefferies is sounding the alarm. The broker judges that the decline in iPhone sales in China is increasing. This analysis by Edison Lee and his team is relayed by Bloomberg. The latest generation of iPhones reportedly got off to an atypical start in China last year, which has recently expanded to a 30% year-over-year decline according to Lee, citing industry monitoring. The rest of the country’s mobile market would have seen growth in December, with Huawei posting the fastest growth with the new Mate 60 range. Apple, for its part, would have recorded a double-digit volume decline in December in China, and Jefferies forecasts a similar drop for 2024.pple nevertheless took advantage today of the announcements from Tim Cook, general manager of the Cupertino group, indicated on United States on February 2. This is therefore good news for fans of the Apple group, the mixed reality headset constituting the first new category of Apple products since the Apple Watch in 2015. The group unveiled the Apple Vision Pro in June 2023. He then described the headset as “a revolutionary spatial computer that seamlessly integrates digital content with the real world, while allowing users to be present and connected to the people around them”. However, analysts do not expect any significant impact on the group’s accounts in the short term, particularly due to the high price of the product. The Vision Pro, priced from $3,499, can be pre-ordered from January 19.
* BlackRock (+1.83% to $797.19). The American asset management giant plans to cut around 3% of its global workforce according to Fox Business. A source told Fox that the reduction of approximately 600 employees in the workforce is described internally as “routine,” following a series of similar layoffs last year, determined by employee performance metrics. The article reports that the layoffs are expected to be announced in the coming days.
* Tesla (+1.25% to $240.45). Tesla and SpaceX executives are reportedly concerned about Elon Musk’s alleged drug use, report Bloomberg and the Wall Street Journal. Citing people familiar with Musk, Tesla and SpaceX, a WSJ report notes that Musk’s alleged drug use – including LSD, cocaine, ecstasy, ketamine and psychedelic mushrooms – is believed to be ongoing. According to the article, former Tesla director Linda Johnson Rice reportedly did not seek re-election in 2019 due to her frustration with Musk’s behavior and concerns about his drug use. In response to the article, Musk tweeted: “After that puff with Rogan, I agreed, at NASA’s request, to do 3 years of random drug testing. No trace of drugs or alcohol was not found.” Remember that Musk then surprised by “shooting” on a cannabis joint live during the very popular podcast of comedian and presenter Joe Rogan…
The Wall Street Journal specifies that Musk’s alleged drug use would worry executives and board members of the companies he runs. Musk reportedly used LSD, cocaine, ecstasy and psychedelic mushrooms, often at private parties. People close to Tesla and the SpaceX CEO told the newspaper that he still uses drugs, particularly ketamine.
* Boston Scientific (+0.45% to $58.42). The group unveiled an agreement to acquire Axonics (+20.48% to $69.36) for approximately $3.7 billion in cash, or $71 per share. Boston Scientific Corporation has entered into a definitive agreement to acquire Axonics, Inc., a publicly traded medical technology company primarily focused on the development and commercialization of differentiated devices to treat urinary and intestinal problems. “We are excited to add Axonics technologies to the Boston Scientific portfolio, a combination that we hope will further strengthen our ability to serve urologists who treat patients living with these often chronic diseases,” said Meghan Scanlon, Senior Vice President and President Urology, at Boston Scientific. The premium is 22%.
* Johnson & Johnson (+0.25% to $161.53). The American pharmaceutical and medical giant has accepted the acquisition of the Ambrx Biopharma group (+101.54% to $27.47) for $28 per share, i.e. a premium of more than 100% and an operation amount of approximately $2 billion. Ambrx is a developer of cancer treatments. “We are pleased to enter into this agreement with Johnson & Johnson to advance scientific research aimed at treating cancers with significant unmet need,” said Daniel J. O’Connor, Chief Executive Officer of Ambrx.
* Merck (+0.15% to $117.38). The American pharmaceutical laboratory confirmed the acquisition of the ‘biotech’ Harpoon Therapeutics (+112% to $22.36) for $23 per share, or nearly $700 million in total. Harpoon is an immuno-oncology group. Merck’s offer represents a 118% premium to Friday’s closing prices, with Harpoon listed on the Nasdaq. The acquisition includes HPN328, an investigational T-cell activator-targeting DLL3 treatment being evaluated in select patients with small cell lung cancer and neuroendocrine tumors. “At Merck, we continue to enhance our oncology product portfolio through strategic acquisitions that complement our current portfolio and advance groundbreaking science to help meet the needs of people with cancer around the world,” said Dr. Dean Y. Li, president of Merck Research Laboratories.
* Boeing (-8.03% to $229). The aeronautical group crashes on Wall Street after a door of its B737 MAX 9 came loose in flight. If by some miracle the incident that occurred on Friday during an Alaska Airlines flight departing from Portland did not cause any injuries, the event is not without consequences for the American giant. In addition to the new image blow for Boeing’s best-seller after the previous quality and compliance problems encountered by the aircraft, the plane is now grounded in the United States. The American Federal Aviation Administration has in fact ordered the temporary immobilization of the 171 B737 MAX 9s in service for inspection. “We have grounded the affected aircraft, and they will remain grounded until the FAA is satisfied that they are safe,” the regulator said.
