Wall Street remains fairly well oriented for the time being this Thursday, the day after a day of break for Juneteenth. The S&P 500 gains 0.11% to 5,493 pts and the Nasdaq 0.06% to 17,872 pts, with the new world’s largest capitalization Nvidia, star of AI, gaining a little more than 2% and reaching 3,400 billion dollars in stock market value. The Dow Jones rose 0.16% to 38,896 pts. On the Nymex, a barrel of WTI crude rose 0.6% to $81.2. An ounce of gold gained 1.2% to $2,376. The dollar index advances 0.2% against a basket of currencies.
US stock markets were closed yesterday to observe ‘Juneteenth’, for the third time in history. Thus, the New York Stock Exchange (NYSE) and the Nasdaq were closed this June 19, in observation of the new federal holiday, adding to the list of market holidays which also includes Thanksgiving Day and Christmas Day , Martin Luther King, Jr. Day, Washington’s Birthday, Memorial Day (…). This new holiday constitutes a symbol of the emancipation of African-American slaves and corresponds to the announcement by General Gordon Granger, on June 19, 1865, in Texas, of federal orders freeing the slaves of Texas.
In economic news this Thursday, housing starts in the United States for the month of May 2024 stood at 1.277 million (-5.5%), compared to 1.39 million consensus and around 1.352 million a months earlier. Building permits numbered 1.386 million, compared to 1.45 million consensus and 1.44 million in April.
Weekly unemployment registrations for the week ending June 15 stood at 238,000, compared to a consensus of 235,000 and a revised level of 243,000 a week earlier.
The Philadelphia Fed manufacturing index for June was +1.3, compared to a FactSet consensus of +4.8 and a level of +4.5 a month before. The index therefore signals a very weak expansion of manufacturing activity in the region considered.
The current account balance for the first quarter showed a deficit of 237.6 billion dollars, against 206 billion consensus.
The Atlanta Fed’s inflation expectations index for June 2024 stood at +2.3%, in line with the reading for the previous month. The indicator measures one-year inflation expectations from the point of view of firms.
Neel Kashkari, Thomas Barkin and Mary Daly from the Fed speak today. Kashkari, head of the Minneapolis Fed, indicated that it would probably take a year or two to bring US inflation back to the 2% target. He adds that wage growth is probably still a little too high to return to 2% in the immediate future. He further explains that the US economy has proven remarkably resilient and that disinflation is nevertheless underway… Kashkari sees some signs of weakening in the economy, but remains optimistic about the strong fundamentals.
The Fed last week kept its key rate in the range of 5.25 to 5.50%, at a 23-year high, in order to maintain continued pressure on the economy and curb inflation. The bank released projections showing a median forecast of 19 U.S. central bankers calling for just one rate cut this year.
Finally, tomorrow, for Four Witches Day, operators will follow the American composite flash PMI index, existing home resales, as well as the Conference Board leading indicators index.
In the news of companies listed on Wall Street, KB Home, Accenture, Kroger, Darden Restaurants and Jabil, have announced their latest financial results.
Values
Dell (+1%) and Super Micro (+8%) provide server racks for xAI’s supercomputer. Michael Dell, the founder of Dell, indicated on the social media network He also posted a photo of the famous factory on X. The supercomputer would be powered by 100,000 Nvidia H100 GPUs and will power xAI’s Grok AI system, entrepreneur Mario Nawfal adds on X. In response to a post from Nawfal, Musk added on X that Super Micro Computer was also participating in this ambitious supercomputer project in the city of Memphis, Tennessee.
Still in AI news, Ilya Sutskever, co-founder and former scientific director of OpenAI (ChatGPT), announced yesterday the launch of a new company dedicated to artificial intelligence, Safe Superintelligence. The startup intends to create a safe AI environment. It has offices in Palo Alto and Tel Aviv. “Our single-minded focus means there are no distractions from management overheads or product cycles, and our business model means safety, security and progress are all shielded from commercial pressures to short term”, asserted Ilya Sutskever on the social media network Sutskever left OpenAI in May.
Amazon (+2%), the American e-commerce giant, intends to invest 10 billion euros, or nearly $11 billion, to manage growing demand for its cloud services and retail products in Germany. 8.8 billion euros would be committed by 2026 to expand Amazon Web Service’s cloud infrastructure, in response to the increased potential of AI in Europe. German Chancellor Olaf Scholz welcomed this investment by Amazon, which could generate more than 4,000 jobs from 2024. This brings the total investments planned by the American group in Germany to 17.8 billion euros.
AMD (+8%!) believes that the cyberattack suffered by the group should not have a significant impact on its operations. “Based on our investigation, we believe that a limited amount of information relating to the specifications used to assemble certain AMD products was accessed on a third-party vendor’s site,” a company spokesperson said, quoted by Bloomberg. “We do not believe this data breach will have a material impact on our business or operations,” added the second largest US manufacturer of PC processors. AMD launched an investigation this week after reports that an organization called Intelbroker had hacked its systems. Yesterday, the group said the intrusion failed to obtain critical information. Remember that AMD is also Nvidia’s main competitor in advanced AI accelerators.
Accenture (+7%), the consulting giant, climbs before the market on Wall Street. It is essentially the perspectives displayed, with the help of artificial intelligence, that support the value. The technology services provider now expects revenue growth of 1.5 to 2.5% for the financial year, compared to a consensus of 1.6%. Previous guidance ranged from 1 to 3%. For the closed quarter, adjusted earnings per share narrowly missed consensus, coming in at $3.13. Quarterly profit was $1.93 billion, on $16.47 billion in revenue. Sales are also lower than expected. The only good news therefore lies in the increased activity linked to generative AI. New orders exceeded $21 billion, compared to $17.3 billion a year earlier. Of this total, $900 million relates to “GenAI” services in the quarter, bringing the annual total to more than $2 billion.
KB Home (+4%), the American real estate developer, published adjusted earnings per share of $2.15 for its second fiscal quarter, compared to a consensus of $1.8 and $1.94 a year earlier. Revenues totaled $1.71 billion, 3% better than expected, compared to $1.77 billion in the corresponding period a year ago. Annual real estate revenues are expected at $6.8 billion in the mid-range, up from $6.7 billion previously. Annual gross and operating margin estimates have also been revised slightly upwards. The backlog at the end of the quarter showed a decline of 14%. “We delivered strong results in our second quarter of 2024, with key metrics above the high end of our guidance ranges,” said Jeffrey Mezger, CEO.
Darden Restaurants (+2%), the American restaurant chain, published revenues of $2.96 billion for its second quarter, in line with broker estimates, for earnings per share of $2.57. him below expectations. The revenue guidance for the current financial year is at $11.85 billion in the middle of the range, which, here again, misses the consensus. Growth would thus be close to 4%, compared to 8.7% a year earlier. For the quarter ended, like-for-like sales were stable while free cash flow fell by a third to $303 million.
Jabil (-9%). The electronics manufacturing subcontractor reported revenues of $6.8 billion, adjusted operating income of $350 million and adjusted earnings per share of $1.89 for its fiscal third quarter. The consensus was $1.85 in quarterly adjusted EPS for $6.53 billion in revenue. For the fourth fiscal quarter, revenues are expected between $6.3 billion and $6.9 billion, for adjusted earnings per share ranging from $2.03 to $2.43. The consensus is $2.22 adjusted EPS and $6.8 billion in revenue.
Kroger (-3%), the American mass distribution group, announced for its first fiscal quarter comparable sales growth of 0.5% excluding gasoline, an operating profit of 1.294 billion dollars and an earnings per share of 1 .29$. Adjusted earnings per share were $1.43. For the financial year, the group maintains its forecasts and envisages comparable revenues excluding gasoline increasing by 0.25 to 1.75%, for adjusted earnings per share ranging from $4.30 to $4.50 and free cash. adjusted flow housed between 2.5 and 2.7 billion dollars.
