Wall Street is now hesitant this Thursday, S&P and Nasdaq giving in to profit-taking at the end of an extremely positive month of November, while operators remain confident in the scenario of an easing of inflation and a peak in rates now reached by the Fed. The S&P 500 consolidates at 4,550 pts, almost unchanged, while the Dow Jones advances by 0.87% to 35,737 pts. The Nasdaq dropped 0.60% to 14,172 pts, notably Tesla and Nvidia. On the Nymex, a barrel of WTI crude dropped 0.6% to $77.4. An ounce of gold lost 0.4% to $2,038. The dollar index advances 0.5% against a basket of currencies. On the bond markets, the yield on the 2-year T-Bond stabilizes at 4.71%, compared to 4.32% on the 10-year bond and 4.48% on the 30-year bond.
The personal income of American households for the month of October 2023 was up 0.2% compared to the previous month, in line with the consensus, after a gain of 0.4% a month before. Household spending increased by 0.2% compared to the previous month, also in line with market expectations, after an increase of 0.7% in September. The ‘core PCE’ price index closely monitored by the Fed also revealed no surprises, growing by 0.2% from one month to the next, as expected, an increase of 3.5 % over one year.
Unemployment claims increased slightly last week in the United States. The US Department of Labor announced unemployment claims for the week ended November 25 at 218,000, up 7,000 from the previous week. The consensus was positioned at 220,000. The four-week average stands at 220,000, down 500. Finally, the number of unemployed workers receiving compensation for the week ended November 18 stands at 1.927 million, up 86,000 over seven days (1.872 million consensus).
The Chicago PMI for November 2023 stood at 55.8, much stronger than expected since the FactSet consensus stood at 45.2. A month earlier, this indicator was 44. Today’s index therefore signals a robust and very unexpected expansion of manufacturing activity in the region in question.
The index of promised home sales in the United States measured by the National Association of Realtors for the month of October 2023 was down 1.5% compared to the previous month, against a consensus of -2 % and an increase revised to +1% for the month of September. The October index thus stood at 71.4, compared to 72.5 a month earlier.
John Williams of the Fed intervenes today and indicates that rates are “at or near” the peak. The president of the New York Fed therefore fuels hopes of a peak in rates, but still considers a restrictive period “for a certain time” necessary. He still admits that monetary policy has never been so restrictive in 25 years…
The barrel of oil is hesitating, while OPEC+ has reportedly reached an agreement to further reduce its production. Citing a source within the cartel, ‘Reuters’ claims that producing countries have agreed to reduce their supply by more than an additional million barrels per day. Two sources added that the deal included an extension of Saudi Arabia’s voluntary 1 million bpd production cut alongside additional supply cuts from other members.
Concerning the publication of results, Salesforce, Synopsys, Snowflake, PVH, Okta or Pure Storage announced yesterday Wednesday. Dell Technologies, Marvell Technology, Johnson Controls, Kroger and Ulta Beauty, release this Thursday.
Values
Salesforce (+7%) stands out with strong growth on Wall Street, while Marc Benioff’s group pleasantly surprised last night with its financial publication and its very solid forecasts. For the third fiscal quarter, the group achieved adjusted earnings per share of $2.11, compared to a consensus of $2.06. Quarterly revenues stood at $8.72 billion, slightly above expectations. For the fourth fiscal quarter this time, Salesforce anticipates adjusted earnings per share ranging from $2.25 to $2.26, compared to a consensus of $2.17. The group’s cost reduction program therefore seems to be bearing fruit, with Salesforce having reduced its workforce to less than 71,000 people at the end of October, or 11% less than a year ago. The San Francisco group expects fourth-quarter revenues ranging from $9.18 billion to $9.23 billion.
Synopsys (-3%), the American software group active in the design and verification of integrated circuits, unveiled yesterday evening fourth fiscal quarter accounts that were higher than expectations. For the quarter ended October 2023, Synopsys posted revenues of $1.60 billion, compared to a consensus of $1.59 billion. Adjusted earnings per share also beat consensus. For the current quarter, first fiscal quarter 2024, revenues are anticipated between 1.63 and 1.66 billion dollars, a range higher than expectations (1.6 billion consensus), while adjusted EPS should be between 3. 40 and $3.45 – versus $3.05 consensus. Fiscal 2024 revenue is expected to be between $6.57 billion and $6.63 billion.
Snowflake (+3%), the cloud data hosting group, is making progress on the stock market following its publication of the third fiscal quarter 2024. For the period, product revenues increased by 34% to $699 million, at compare to a consensus of $675 million. Total quarterly revenue increased 32% to $734 million. Adjusted operating profit was $72 million. Adjusted free cash flow was $111 million. Adjusted earnings per share were 25 cents, compared to the consensus estimate of 16 cents. For the fourth fiscal quarter of 2024, the group anticipates product revenues ranging from $716 to $721 million, an increase of 29 to 30%, and a non-GAAP operating margin of around 4%. Thus, the forecasts provided exceed analysts’ expectations, the consensus product revenue being 702 million.
Big Lots (+20%) posted a smaller adjusted quarterly loss than expected. The US discount retailer nevertheless missed the earnings consensus in its third quarter, with revenue falling 15% to $1.03 billion. Quarterly net income was $4.7 million, or 16 cents per share.
Okta (-4%) exceeded profit expectations for the closed quarter, but the group also warns of a large-scale security breach. Concerning the results, the group envisages an adjusted profit per share ranging from 50 to 51 cents for the fourth fiscal quarter which has just started, against 36 cents of consensus.
Pure Storage (-14%), the data storage player, is falling on Wall Street, on disappointing guidance for the current quarter and the 2024 financial year. The third quarter figures, however, exceeded market expectations.
Kroger (+2%) posted comparable sales excluding gasoline in the third quarter, down 0.6%, operating profit of $912 million and earnings per share of 88 cents. The group therefore displays a mixed performance in an uncertain context. Adjusted earnings per share, of 95 cents, still exceeded expectations. Total sales reached $34 billion in the quarter. Kroger updates its annual guidance, anticipating like-for-like sales excluding gasoline up 0.6 to 1%.
Ford (-2%) adjusted its annual financial estimates downward to reflect an estimated $1.7 billion impact from the recent UAW strike. After withdrawing its guidance due to the UAW strike, Ford now expects full-year adjusted EBIT of between $10.0 billion and $10.5 billion and adjusted free cash flow of between $10.0 billion and $10.5 billion. between $5.0 and $5.5 billion. Although affected operations in the United States have resumed, the forecast reflects the effects of strike-related manufacturing disruptions on wholesale sales and revenue. Ford generated net profit of $4.9 billion and adjusted EBIT of $9.4 billion in the first three quarters of the fiscal year.
Tesla (-1%) remains monitored this Thursday for the first deliveries of its Cybertruck, previously postponed several times.
Microsoft (stable) has secured a non-voting seat on the board of AI startup OpenAI in which the Redmond giant had previously invested heavily. At least that’s what Satya Nadella’s group announced yesterday Wednesday. Remember that the OpenAI file has been the subject of a series of twists and turns in recent days, with Sam Altman having taken over the management of the startup on the condition that the board of directors be reshuffled.
ImmunoGen jumped 82% on Wall Street, adjusting to the acquisition offer made by AbbVie for $10.1 billion. The biopharmaceutical giant will thus acquire the biotechnology firm, which designs cancer treatments.
