On the eve of Independence Day, the session ended 3 hours early on Wall Street. The duration of the session was nevertheless sufficient to establish new records despite a series of unremarkable macroeconomic indicators…
At the close, the S&P 500 rose by +0.51% to 5,537 points, in contact with a historic high of 5,539.27 points reached during the session. The Dow Jones fell by the thickness of the line; -0.06% to 39,308 points. The Nasdaq ended on a fireworks note, at a historic high of 18,188 points, still carried by Tesla.
Yesterday, Wall Street was reawakened after Federal Reserve Chairman Jerome Powell said that inflation is moving in the right direction. Speaking at the ECB’s annual forum in Sintra, Portugal, he said the Fed had made “quite a bit of progress” in reducing inflation, while stressing that policymakers needed more evidence before lowering interest rates. Powell said that inflation in services was more stubborn, linked to wages. However, the Fed chief fueled optimism, arguing that the labor market is easing and therefore presents less of a problem for inflation. Moreover, Powell anticipates that inflation will return to the 2% target, perhaps by the end of next year or more likely in 2026.
On July 4, investors were presented with a wave of disappointing indicators… On the American employment front, one of the main issues of the moment on Wall Street, job creations in the private sector for the month of June came out at 150,000 according to the highly anticipated ADP report, compared to a Bloomberg consensus of 165,000 and a level of 157,000 a month earlier, in revised reading. “Job growth was solid, but not broad-based,” says Nela Richardson, chief economist at ADP. “Without a rebound in hiring in leisure and hospitality, June would have been a dismal month.”
For their part, unemployment claims increased more than expected last week. The US Department of Labor announced that for the week ending June 29, unemployment claims stood at 238,000, up 4,000 from the previous week’s revised level. The consensus was set at 234,000. The four-week average stands at 238,500, up 2,250. Finally, the number of unemployed people receiving benefits for the week ending June 22 came to 1.858 million (1.840 million expected), up 26,000 over seven days, the highest since November 2021. Similarly, US-based employers announced 48,786 job cuts in June, according to Challenger, Gray & Christmas. Excluding 2020, in the midst of the pandemic, this is the largest number of job cuts for a month of June since 2009.
On Friday, traders will watch the monthly government report on the labor market situation for the same month of June. Economists expect about 190,000 job creations with the unemployment rate stable at 4%.
Another disappointing data of the day: the ISM services index for June. The latter stands at 48.8, against 52.6 consensus and 53.8 a month earlier. This indicator is thus at its lowest in four years and signals a contraction in activity. Almost all sub-indices are showing declines, including those relating to employment and prices.
Finally, new durable goods orders for May decreased by 0.5% compared to the previous month, against an increase of 0.2% expected by the consensus. The increase for the previous month was also revised to +0.4%. Durable goods orders excluding transportation showed a decrease of 0.7% month-on-month, against +0.3% expected, after an increase revised to 0.5% in April.
On the oil side, the barrel of WTI crude is up +0.73% to $83.67. North Sea Brent is up +0.58% to $87.10.
The dollar lost -0.39% against the euro, now trading at 0.927 euros.
Gold remains firm, up +0.98% to $2,354. Bitcoin falls by -3.77%, slipping below $60,000.
Values
* Tesla (+6.54% to $246.39). The group remains buoyed by its delivery figures for the quarter ended in June. Over the period, Tesla produced approximately 411,000 vehicles and delivered nearly 444,000. In addition, the group deployed 9.4 GWh of energy storage products in the second quarter, the highest quarterly deployment to date.
Tesla will release its full quarterly financial results after the close on July 23.
* Paramount (+4.04% to $20.10). Independent film and television producer Skydance Media has reached a preliminary agreement to buy Shari Redstone’s National Amusements and merge with Paramount Global, the parent company of CBS and MTV, according to press reports. National Amusements, the family-owned company that controls Paramount, will submit the deal to a special committee of Paramount directors, Bloomberg sources said.
Under the tentative deal, Skydance would pay $1.75 billion for National Amusements, which owns 77 percent of Paramount’s voting stock. The deal includes a 45-day period during which other bidders could submit offers, according to the Wall Street Journal, which first reported the news Tuesday. Film producer Steven Paul, Seagram heir Edgar Bronfman Jr. and IAC’s Barry Diller have also expressed interest in acquiring National Amusements, according to Reuters. Paramount owns the Paramount Pictures movie studio, as well as other flagship assets such as CBS, MTV and Nickelodeon.
* Alaska Air (+1.41% to $40.29). The airline group’s flight attendants will receive an average pay increase of 32% as part of a new three-year tentative agreement, the Associate of Flight Attendants union announced.
* Southwest Airlines (+1.03% to $28.58). The U.S. airline has adopted a “poison pill” mechanism, a protective clause, due to pressure from activist investor Elliott Investment Management for changes at the airline. The plan is aimed at deterring what Southwest called “de facto or negative control” of the group without compensating other shareholders, Southwest said. It comes after Elliott disclosed in June a $1.9 billion stake in the carrier and demanded new leadership and an overhaul of Southwest’s operations to better compete with other airlines.
* Apple (+0.58% to $221.55). The Cupertino, California-based firm will have an observer role on the board of directors of OpenAI, the creator of ChatGPT, as part of the artificial intelligence (AI) partnership between the two groups announced last month, Bloomberg reports. Phil Schiller, head of the App Store and former Apple marketing chief, was chosen for the position, the agency said.
* Regeneron (-1.97% to $1,024.09). Sanofi and its U.S. partner have won approval from the European Medicines Agency for the use of Dupixent, its top-selling anti-inflammatory drug, in uncontrolled chronic obstructive pulmonary disease (COPD). The European Medicines Agency (EMA) has approved Dupixent for the treatment of COPD in patients who cannot be treated with standard inhalations, Sanofi said. The Committee for Medicinal Products for Human Use, which reports to the EMA, had recommended approval of Dupixent in the European Union in late May. COPD, also known as “smoker’s cough,” is a potentially fatal disease that affects 35 million people in Europe and 16 million Americans.
* Rivian (-1.61% to $14.65). The American electric vehicle manufacturer denied a press report that it was in discussions with Volkswagen to extend their partnership beyond the recently announced software joint venture.
