Wall Street is trying to recover this Tuesday, with a better trend on the flagship technology index Nasdaq which regains 0.76% to 17,629 pts, after having suffered yesterday from a brutal fall in Nvidia. The S&P 500 gains 0.21% to 5,459 pts. The Dow Jones, on the other hand, consolidated by 0.38% to 39,260 pts… On the Nymex, a barrel of WTI crude dropped 0.1% to $81.6. An ounce of fine gold fell 0.3% to $2,337. The dollar index advances 0.3% against a basket of reference currencies.
Janet Yellen, former head of the Fed and now US Treasury Secretary, told Yahoo! Finance that she did not see the basis for a recession in the United States and that she also expected inflation to return towards the Fed’s 2% objective next year, i.e. a faster pace than anticipated by central bankers. The median projection of Fed members last week showed a return of the Fed’s preferred inflation measure to 2% in 2026. The Fed’s ‘dot plot’ also showed the prospect of a single rate cut this year.
Mary Daly, head of the San Francisco Fed, for her part, clarified yesterday that there were risks for the labor market, which would be close to an inflection point where a further slowdown could result in a rise unemployment. She also discussed various topics and noted that artificial intelligence reduces costs and therefore could be a deflationary force. Cautious, she still judges that the turbulence in inflation data so far this year has not inspired confidence. However, there is also no evidence that stagflation or recession is coming. “We must fully restore price stability without painful disruption to the economy,” Daly also said.
“So far, the labor market has slowly adjusted … But we are getting closer to a point where this benign outcome may be less likely,” Daly said Monday in a speech prepared for delivery at the Commonwealth Club World Affairs of California in San Francisco. “The future slowdown in the labor market could result in higher unemployment, as companies have to adjust not only vacancies but also actual jobs,” she said. “At this stage, inflation is not the only risk we face,” said the official.
Governor Michelle Bowman, for her part, ruled that rates must be maintained for a certain period of time to bring inflation under control. In prepared remarks for a speech in London, she said U.S. inflation remained high, with a number of upside risks to prices. “Supply chain improvements and increased immigrant labor supply, which helped bring down inflation last year, are unlikely to continue “, she estimated. Regional conflicts could also put upward pressure on energy and food prices. Looser financial conditions or fiscal stimulus could also fuel inflation. The housing needs of immigrants as well as tensions on the labor market could also push up prices…
“If the available data indicates that inflation is moving sustainably towards our 2% objective, it will eventually become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming too restrictive,” Bowman still slipped.
The Chicago Fed’s National Activity Index for May 2024, announced today, came in at +0.18, compared to a consensus of -0.40 and a revised reading of -0.26 for the previous month.
The April adjusted S&P Case-Shiller ’20-City’ index rose 0.4% from a month earlier, while the unadjusted index rose 1.4% month-over-month. other and 7.2% over one year. The FHFA index rose 0.2% from March and 6.3% year-over-year.
The Richmond Fed’s regional manufacturing index for June 2024 came in at -10, compared to a FactSet consensus of -4 and a level of zero a month earlier. The index therefore signals a clear contraction in manufacturing activity in the region considered.
The Conference Board’s US consumer confidence index for June came in at 100.4, compared to a market consensus of 100 and a revised reading of 101.3 for the previous month.
Tomorrow, the markets will be attentive to new home sales in the United States, as well as to the weekly report from the Department of Energy concerning domestic oil stocks for the week ending June 21.
On Thursday, the economic program will be quite busy, with orders for durable goods, GDP for the first quarter (3rd estimate), the balance of international trade in goods, weekly unemployment claims for the week ending June 22, as well as wholesaler stocks or promises of housing sales.
Finally, on Friday, it will be necessary to monitor household income and spending for the month of May as well as the associated “core” inflation index, closely followed by the Fed, but also the Chicago PMI manufacturing index and the of American Consumer Sentiment from the University of Michigan. Thomas Barkin and Michelle Bowman of the Fed will also have their say.
In corporate news this week on Wall Street, FedEx (after market) and Carnival (before market) publish their accounts today. Micron (after the close), Paychex (pre-market), General Mills (before the close), Jefferies Financial (pre-market), Levi Strauss (before the open) and BlackBerry (after the close), announce Wednesday. Nike (after market), McCormick and Walgreens Boots Alliance release Thursday.
Values
Nvidia (+3%) recovered this Tuesday and returned to the 3,000 billion dollars in capitalization, after having lost 13% in a straight line since its peaks last week, when the group briefly reached the rank of first world market capitalization with a peak valuation of more than $3.4 trillion. Microsoft is once again the first company in the world by valuation, at around $3,340 billion, while Apple for its part weighs a little over $3,200 billion. Nvidia therefore fell 13% after briefly overtaking Microsoft as the world’s largest capitalization. Bloomberg notes that the stock has entered a technical correction zone, since its fall exceeds 10% on its recent peak.
Remember that at the beginning of the month, Nvidia CEO Jensen Huang unveiled his roadmap at the Computex 2024 conference in Taipei. While the Blackwell generation is already eagerly awaited this year, Huang has promised a Blackwell Ultra architecture next year, then in 2026 the new generation called “Rubin”. While the Blackwell model is still in production with a view to delivery to customers later this year, Huang is already planning with future architectures, at a rate which should be annual – whereas the group had previously adopted a rate of two years to update its products. At the end of May, the stock soared following the announcement of quarterly results significantly better than expectations with AI.
In today’s news this Tuesday, Bright Machines, a software and robotics startup, raised $106 million in a Series C round including Nvidia and Microsoft. The San Francisco firm designs equipment and software that automate a range of manufacturing tasks through the use of AI and machine learning.
Tesla (+2%) will recall 11,688 of its Cybertrucks due to a problem with the windshield wiper which could reduce visibility and increase the risk of an accident, and 11,383 units due to a trunk lining which could have been poorly fixed. This was announced by the American road safety authority, NHTSA. This is the fourth recall concerning Tesla’s futuristic-curved electric pickup truck in the United States. The front windshield wiper motor controller could therefore stop working if it receives too much electrical current. The Austin, Texas-based group says it is not aware of any accidents or injuries related to the issue, however. The other recall involves a piece of trim along the Cybertruck’s bed that could come loose and fly away, creating a hazard to other motorists. Tesla will apply adhesion promoter and tape or replace the missing trim, according to Reuters.
Boeing (-2%) has reportedly offered to acquire Spirit AeroSystems in a deal financed primarily by stock that would value the key supplier at around $35 per share, according to sources familiar with the matter cited by Bloomberg. The group backed away from its proposed cash financing after months of discussions between the companies, said the agency sources, who asked not to be identified discussing the confidential matter. A valuation of $35 per share would represent a premium of approximately 6% over Spirit’s closing price on Monday and a bonus of 22% over the closing price on February 29, the day before the negotiations were announced. takeover of Boeing.
Apple (+1%) reportedly rejected proposals from Meta Platforms (+2%) to integrate the social media company’s AI chatbot into the iPhone months ago, according to people with knowledge of the matter cited by Bloomberg. The two groups are not currently discussing the use of Meta’s Llama chatbot in an AI partnership and therefore reportedly had “only brief discussions” in March, said Bloomberg’s sources, who asked not to be contacted. be identified because the situation is private. Dialogue about a partnership has not reached any formal stage and Apple is said to have no active plans to integrate Llama. The preliminary discussions took place as Apple began making deals to use OpenAI’s ChatGPT and Alphabet’s Gemini in its products. The California-based iPhone maker announced the ChatGPT deal earlier this month and said it plans to offer Gemini in the future. He also unveiled “Apple Intelligence” and its AI features.
Apple reportedly decided not to move forward with Meta, in part because of its privacy practices, which were deemed insufficiently strict. Tim Cook’s group would also consider ChatGPT to be a superior offering. Google, meanwhile, is already a search partner in Apple’s Safari web browser. A future Gemini deal would build on this relationship, according to Bloomberg.
Carnival jumped 5% on Wall Street this Tuesday, as the cruise giant has just raised its annual profit forecasts for the second time this year, with rising prices and sustained demand. The group now expects, for the 2024 financial year, adjusted earnings per share of around $1.18, compared to previous guidance of 98 cents. For the third quarter alone, adjusted EPS is anticipated at $1.15, compared to a consensus of $1.10. Management indicates that the group continues to record strong bookings, with historic volumes for 2025.
