The indices ended this Friday in the green on Wall Street, after contrasting statistics. The S&P 500 gained +0.8% to 5,137 pts (+1.33% over the week). The Dow Jones rose +0.32% to 39,087 pts, but only gained +0.05% weekly. The Nasdaq is once again very firm, with an increase of +1.14% to 16,274 pts (+1.87% over the week). The markets remain supported by Nvidia and the technology rating, driven by enthusiasm around artificial intelligence.
On the economic front, the final US manufacturing PMI for February came in at 52.2, compared to a market consensus of 51.5 and a previous reading of 51.5 as well. The index therefore signals an expansion in national manufacturing activity in February.
The American ISM manufacturing index for February stood at 47.8, in a contraction zone below the 50 mark, while the market consensus stood at 49.5. The indicator was 49.1 a month ago. The new orders indicator stood at 49.2 (52.5 in January).
The final index of American consumer sentiment from the University of Michigan for the month of February 2024 stood at 76.9 in final reading against 79.6 of market consensus. The preliminary index stood at 79.6.
Thomas Barkin, Christopher Waller, Lorie Logan, Raphael Bostic, Mary Daly and Adriana Kugler from the Fed speak today. Barkin, president of the Richmond Fed, was quite inflexible, refusing to say that there would be rate cuts this year. According to him, this will depend on the progress recorded on the inflation front. He adds that he is in no rush to lower rates at this time. Governor Waller and Dallas Fed President Lorie Logan have indicated that they see quantitative monetary tightening (QT) continuing at a more moderate pace. “(The Fed’s) balance sheet plans are aimed at achieving adequate liquidity levels,” Waller said at a monetary policy conference hosted by the Clark Center for Global Markets. “They do not imply anything about the direction of interest rate policy, which is focused on influencing the macroeconomy and achieving our dual mandate,” the official explained.
Raphael Bostic, Austan Goolsbee, John Williams and Loretta Mester spoke yesterday. Bostic, president of the Atlanta Fed, said it would likely be appropriate for the Fed to begin cutting rates this summer based on its inflation outlook. Goolsbee, head of the Chicago Fed, said the environment was restrictive and the impact of the supply shock on inflation was taking time to materialize. He says the disinflation benefits of the supply chain are yet to come. It also notes significant long-term progress regarding inflation. Goolsbee remains concerned about possible external shocks… Williams has noted remarkable resilience in the economy. The head of the New York Fed judged that the central bank could take its time to decide on the next monetary movement. He anticipates rate cuts later this year… Finally, Mester, boss of the Cleveland Fed, estimated that three rate cuts seemed appropriate in 2024. She indicates that a slowdown in the job market would be welcome to implement these relaxations…
According to the CME Group’s FedWatch tool, the probability of an additional monetary status quo leaving the range on the fed funds rate between 5.25 and 5.50% on March 20, at the end of the next monetary meeting, is over 97%.
On the oil side, a barrel of WTI crude gained 2.06% to $79.89 (+2.96% over the week). An ounce of gold advances 0.9% to $2,073.
The dollar is stable, at 0.9226 against the euro.
An ounce of gold exchanges for $2,083 (1,922 euros). Bitcoin gained more than 14% over the week, to $61,212.
Values
* Dell Technologies (+31.62% to $124.59). Big run this Friday on Wall Street for the IT giant. The Texan group is now counting on revenues and profits higher than expectations, with demand for artificial intelligence servers – equipped with Nvidia chips (+4% to $822.79). “Our strong momentum in AI-optimized servers continues, with orders increasing nearly 40% sequentially and the backlog nearly doubling, closing our fiscal year at $2.9 billion,” the company said. Director of Operations Jeff Clarke. In addition, the PC market is showing some signs of recovery, with Dell management banking on the upcoming refresh cycle and the impact of AI on the PC segment…
For the 4th fiscal quarter ended at the beginning of February, Dell posted revenues down 11% to $22.3 billion, compared to a consensus of around $22.2 billion. Adjusted earnings per share clearly exceeded expectations, at $2.20 versus $1.73 consensus. In detail of revenues, the turnover of the infrastructure solutions segment fell by 6% to $9.3 billion, while the turnover of the group dedicated to ‘client solutions’ fell by -12 % to $11.7 billion. For the current fiscal year, Dell is being aggressive and is counting on revenues ranging from $91 to $95 billion, compared to a consensus of $92 billion. Annual adjusted earnings per share are expected at $7.50, plus or minus 25 cents ($7.15 consensus).
* NetApp (+18.17% to $105.31). For its third fiscal quarter 2024, the group announced revenues of $1.61 billion (+5%), compared to a consensus of $1.59 billion. Adjusted earnings per share were $1.94 ($1.37 a year earlier). The consensus was for $1.69 quarterly adjusted EPS. For the 2024 financial year, NetApp is boosting its forecasts and now says it is considering adjusted earnings per share ranging from $6.40 to $6.50, well above the consensus ($6.15). The Californian group is benefiting from demand for its cloud-based data solutions. For the 4th quarter alone, adjusted EPS is expected between $1.73 and $1.83 ($1.73 consensus).
* Autodesk (+2.54% to $264.74). The revenues and profits of the American software publisher, known for its AutoCAD product, exceeded market expectations during the 4th quarter of its fiscal year. Over the period, adjusted earnings per share were $2.09, compared to less than $2 consensus and $1.86 a year earlier. The San Francisco group’s revenues totaled $1.47 billion, up +11% year-on-year. For its first fiscal quarter 2025, Autodesk forecasts adjusted earnings ranging from $1.73 to $1.78 per share for revenues of $1.385 billion to $1.4 billion. The group envisages 2025 adjusted annual EPS of $7.89 to $8.11, and revenues ranging from $5.99 to $6.09 billion, which would represent growth of 9 to 11%.
* Hewlett Packard Enterprise (+2.17% to $15.56). The group revealed quarterly financial results and forecasts without much relief. Adjusted earnings per share were 48 cents, for revenues of $6.76 billion ($7.1 billion consensus). Adjusted earnings per share were expected between 42 and 50 cents, while revenues were expected between $6.90 and $7.30 billion. HPE also lowered its revenue and profit forecasts for the current fiscal year, with weakening demand for networking products and lack of availability of computer chips. Revenues are expected to rise up to 2%, excluding currency fluctuations, for the year ending in October. Previously, HPE forecast annual sales growth of 2-4%. Profit excluding items would be between $1.82 and $1.92 per share, again a downward revision.
Remember that Hewlett Packard Enterprises acquired the network equipment manufacturer Juniper Networks (+0.92% to $37.37), a small rival of Cisco, for around $14 billion, in order to strengthen its network offerings. ‘artificial intelligence.
* Archer Daniels Midland (+2.13% to $54.24). The U.S. agricultural trader said it had delayed the release of its annual report and warned that it planned to report a material weakness in the company’s internal financial reporting practices.
* Microsoft (+0.45% to $415.5). Elon Musk, the boss of Tesla (+0.38%) SpaceX, creator ChatGPT, OpenAI, General Sam Altman, abandoned development of intelligence humanity. This is what the Reuters agency says. According to the action launched Thursday, Altman of OpenAI, Greg Brockman, approached Elon Musk to ‘open source’ for profit. OpenAI, now Microsoft, would have violated its initial contract, since the company would now be oriented towards generating profit. This desire by OpenAI to make money would violate the initial commitment, Musk’s lawyers said, cited by Reuters, as part of this lawsuit filed in San Francisco. Recall that Elon Musk co-founded OpenAI in 2015, but then resigned from the board of directors in 2018.
* New York Community Bancorp (-25.89% to $3.55). The most feared regional American bank of the moment is stumbling again on Wall Street. The group has just announced the departure of its general manager Thomas Cangemi as well as weaknesses in internal control and a tenfold increase in its quarterly loss to $2.7 billion. The commercial real estate lender has discovered significant weaknesses in how it tracks loan risks. He has depreciated the value of companies acquired years ago and is changing management. Alessandro DiNello takes over as CEO effective immediately. Impairments related to past transactions amount to $2.4 billion, with no impact on capital ratios or credit agreements. The institution expects to miss the annual report filing deadline as it tightens controls.
* Zscaler (-9.4% to $219.23). The American cloud security specialist is losing ground despite quarterly accounts above expectations and an increase in its forecasts. For its second fiscal quarter, the group posted adjusted earnings per share of 76 cents, compared to a consensus of 58 cents and 37 cents a year earlier. Revenues were $525 million (+35%), beating the consensus by more than 3%, while they stood at $388 million a year earlier. For the 3rd fiscal quarter, the group forecasts revenues of $535 million in the middle of the range, in line with expectations. The annual sales guidance is raised to $2.12 billion for the mid-range. The Californian group anticipates adjusted EPS ranging from $2.73 to $2.77 for the year. The consensus was around $2.50.
* Veeva Systems (-1.55% to $222.01). The American software group which provides cloud solutions to the pharmaceutical industry exceeded market expectations for its 4th fiscal quarter. Quarterly revenues were $631 million, up +12% to $621 million. Adjusted earnings represented $1.38 per share ($1.15 per share a year ago and $1.30 consensus). For the financial year ending at the end of January 2025, the group expects revenues of $2.725 billion to $2.74 billion, as well as adjusted EPS of $6.16.
