Wall Street ended the week under pressure, in a clear movement of withdrawal, while the scenario of an attack by Iran against Israel, in retaliation for a deadly strike, attributed to the IDF, against the consulate in Damascus gained in credibility throughout the day. For its part, the White House considers the threat “plausible”. In addition to diplomatic frictions and dashed hopes of a rate cut from the Fed, there is the doubt generated by mixed publications from large American banks which have just opened the ball of quarterly publications on Wall Street.
In this overall context of tensions, the S&P 500 fell by -1.46% to 5,123 points at the close (-1.52% over the week). The Dow Jones is just as feverish… Sinking 38,000 pts at the close, the industrial stock index dropped -1.24% to return to 37,983 pts (-2.34% weekly). The Nasdaq dropped -1.62% this Friday to 16,175 pts, but remained fairly stable week-on-week with a simple decline of -0.49%.
At the macro level, the University of Michigan’s preliminary American consumer sentiment index for the month of April came in at 77.9, compared to the market consensus of 79 (79.4 a month earlier). The indicator of one-year inflation expectations linked to this index stands at 3.1% compared to 2.9% the previous month (2.9% consensus). Consumers perceive little change in the state of the economy since the start of the new year. Furthermore, these increases in inflation expectations are modest enough that consumers do not appear to be worried about the return of high inflation.
With international diplomatic tensions, oil markets are volatile. The barrel of WTI crude finally fell by -0.28% to $85.36 this Friday, after a surge of more than 3% to $87.65 during the day. Despite this ultimately moderate increase in the barrel, the price of black gold remains to be closely monitored because a possible strike by Iran on Israel would undoubtedly be analyzed as an escalation of tensions in the Near and Middle East. A conflictual push on oil-producing geographies is indeed likely to propel oil markets to new heights.
In terms of currencies, the dollar trades at 0.937 against the euro, and gains +1.75% over the week.
Gold ended the session at an all-time high of $2,376 per ounce.
Values
* State Street (+2.53% to $75.78). The American financial group reported a -16% decline in quarterly profit to $463 million, or $1.37 per share, due to a 6% increase in expenses, including $130 million $ to replenish the insurance fund of the Federal Deposit Insurance Corporation. Consistent with general industry trends, net interest income (NII) decreased 6.5% to $716 million. At the end of the March quarter, the bank had a record $4.3 trillion in assets under management (AUM).
* Apple (+0.86% to $176.55). The Cupertino company is counting on AI to boost its Mac sales. According to information obtained by ‘Bloomberg’, Apple is about to equip its computers with a new family of internal processors with artificial intelligence processing capabilities. The company, which launched its first Macs equipped with M3 chips 5 months ago, is already on the verge of producing the next generation – the M4 processor – according to agency sources. The new chip would be available in at least 3 main versions, and should equip each Mac model.
After peaking in 2022, Mac sales fell 27% during Apple’s most recent fiscal year. With these new chips, Apple intends to give a boost to its computer sales, the models of which equipped with the M4 chip should begin to be marketed at the end of the year. The Apple firm’s new chips are part of a broader initiative to integrate AI capabilities into all of its products. New iMacs, a low-end 14-inch MacBook Pro, high-end 14-inch and 16-inch MacBook Pros, and Mac mini are all expected to feature M4 chips. The company would like to highlight the AI processing capabilities of the new chips and how they will integrate with the next version of macOS in June at Apple’s annual developer conference. According to the latest rumors, the group could take the opportunity to announce a new partnership in AI and unveil important changes to iOS.
* JP Morgan Chase (-6.47% to $182.79). The largest American bank revealed its quarterly results. Over the first 3 months of 2024, JP Morgan Chase achieved net profit of $13.4 billion, or EPS of 44 cents, for adjusted revenues of $42.55 billion, up 8.2%, and against a consensus of $41.64 billion. Provisions for loan losses reached $1.9 billion. Full-year net interest income, excluding trading, is expected to be $89 billion, higher than the previous estimate of $88 billion, but lower than the $90.68 billion expected by analysts.
“Many economic indicators remain favorable,” said Jamie Dimon, CEO of JP Morgan. “However, looking forward, we remain alert to a number of important uncertain forces.” The leader cited wars and geopolitical tensions, “persistent inflationary pressures” that “may likely continue” and the Federal Reserve’s quantitative tightening campaign. “We don’t know how these factors will evolve, but we need to prepare the group for a wide range of potential environments to ensure we can always be there for customers.”
* Intel (-5.16% to $35.69) and AMD (-1.87% to $85.71) are under pressure. China is stepping up efforts to reduce its dependence on foreign technology and plans to eliminate American chipmakers from its telecommunications infrastructure by 2027, according to the ‘Wall Street Journal’. The country’s Ministry of Industry and Information Technology (MIIT) earlier this year ordered major operators to phase out foreign processors that are crucial to their networks within the stipulated deadline.
* BlackRock (-2.87% to $763.4). The New York group revealed the results for its first quarter of 2024. Over the period, the asset management giant recorded adjusted net profit up 23% compared to the previous year at $1.5 billion. , or $9.81 per share, beating analysts’ average estimate of $9.34. Net profit came to $1.57 billion, or $10.48 per share ($1.16 billion and $7.64 per share a year earlier).
Revenues jumped 11% to $4.72 billion thanks to increased performance fees and technology revenues, as well as the impact of rising markets on average assets under management. Assets under management reached a record level of $10.5 trillion, driven by consistent organic growth and positive market movements. Investment advisory and administrative fees, which correspond to a percentage of assets under management and constitute BlackRock’s main source of revenue, climbed nearly 8.8% to reach $3.63 billion.
* Citigroup (-1.7% to $59.68). The New York financial institution has unveiled the accounts for its first fiscal quarter. These results are down with the increase in costs, but nevertheless better than expected. The firm recorded a net profit of $3.37 billion for the quarter ended at the end of March, down 27% year-on-year, or an EPS of $1.58. Revenues fell 2% to $21.1 billion. The market consensus was $1.23 EPS for $20.4 billion in revenue. FICC revenues (fixed income, raw materials and currencies) came to $4.15 billion ($4.12 billion expected), while equities revenues (shares) reached $1.23 billion ($1.11 billion consensus). ).
Chief executive Jane Fraser began a major reorganization in September to simplify the bank and improve its performance. The costs of the reorganization pushed spending to $14.2 billion. Citigroup’s business overhaul has resulted in “a cleaner, simpler management structure that fully aligns with and facilitates our strategy,” the executive said. “We have made good progress by exiting several existing platforms, streamlining end-to-end processes and strengthening our risk and control environment.”
* Morgan Stanley (-0.75% to $86.19). After already losing more than 5% on Thursday, the financial services group is backing down on a report from the ‘Wall Street Journal’ according to which federal regulators are investigating how the bank controls customers who could launder money through intermediary of its wealth management division. The U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency (OCC) and other Treasury Department offices are involved, according to the WSJ. The question is whether the bank has “sufficiently investigated the identity of potential customers and the origin of their wealth, as well as how it monitors the financial activity of its customers,” the newspaper said.
The US government has stepped up pressure on the industry to tighten controls against money laundering. The bank told regulators it was improving controls and procedures and met with Federal Reserve officials to ease concerns last year.
* Wells Fargo (-0.39% to $56.47). The Californian banking group generated a net profit of $4.62 billion over the first three months of the year, or $1.20 per share ($4.99 billion and $1.23 per share a year earlier). . Adjusted EPS came to $1.26 ($1.11 consensus). Net interest income, the difference between what the bank pays for deposits and what it earns for loans, fell 8% to $12.23 billion ($12.3 billion consensus).
Overall revenue ($20.86 billion) nevertheless exceeded estimates, helped by an increase in investment advisory fees and brokerage commissions. “The investments we are making across the franchise contributed to an increase in revenue compared to the fourth quarter, as an increase in non-interest income more than offset an expected decline in net interest income,” said CEO Charlie Scharf.
Wells Fargo warned last January that its net interest income could decline 7% to 9% this year. The group is still subject to an asset cap that prevents it from growing as long as authorities judge that the problems linked to the fake accounts scandal have not been resolved.
