Wall Street begins the week in disorganized order this Monday. The S&P 500 gained 0.52% to 4,722 pts, but the Dow Jones lost 0.23% to 37,379 pts. The Nasdaq climbed 1.19% to 14,697 pts, boosted by the rebound of Nvidia. After a delicate first stock market week in 2024, the American stock market remains uncertain in any case, with the news remaining mixed on the ‘Magnificent Seven’, notably Tesla and Apple… On the Nymex, the barrel of crude falls closely by 4% to $70.9 after Saudi Arabia on Sunday lowered the official selling price of its oil for February. An ounce of gold lost 0.4% to $2,041. The dollar index lost 0.2% against a basket of reference currencies. On the bond markets, the yield on the 2-year T-Bond is 4.34%, compared to 3.99% on the 10-year and 4.16% on the 30-year.
According to the CME Group’s FedWatch tool, it is very likely (95%) that the Fed will leave its rates unchanged on January 31 after its next monetary meeting, between 5.25 and 5.5%. The first relaxation could take place on March 20 during the next meeting (probability of more than 60%). The latest economic statistics showed, across the Atlantic, a fairly resilient job market but some additional signals of economic slowdown.
Lorie Logan of the Dallas Fed (non-voter) emphasized the Fed’s quantitative tightening plans, saying the central bank should slow the pace as slower normalization reduces the likelihood that “QT” must stop prematurely if the bank is under stress and something breaks. Logan’s comments follow December FOMC Minutes, in which officials suggested it would be appropriate to discuss the factors that determine the end of QT… Economists expect a formal announcement on QT at the March FOMC meeting and a slowdown starting in April. However, the timing of the end of QT is uncertain, with some seeing bank liquidity strong enough to further reduce the balance sheet significantly over a year, while others see the Fed exercising more caution.
On the economic front this Monday, operators will monitor consumer credit figures just this evening. Raphael Bostic of the Fed speaks during the day.
Tomorrow Tuesday, investors will follow the balance of international trade in goods and services. On Wednesday, wholesale stocks and weekly report on US domestic oil stocks will be monitored. John Williams of the Fed will also speak on Wednesday. The news will be a little more extensive on Thursday, with the American consumer price index for December, weekly unemployment claims, as well as the American budgetary balance. On Friday, markets will follow the producer price index and a speech from the Fed’s Neel Kashkari.
Concerning companies listed on Wall Street, Jefferies Financial is publishing its quarterly results this evening. Albertsons, Tilray and PriceSmart will be there on Tuesday. KB Home will announce on Wednesday, while Taiwan Semiconductor Manufacturing Company and Infosys will publish on Thursday.
On Friday, banks and financial institutions will kick off the fourth quarter results season. UnitedHealth, JP Morgan Chase, Bank of America, Wells Fargo, BlackRock, Citigroup and Bank of New York Mellon will reveal their accounts before the market. Delta Air Lines will also release Friday. Major US banks are expected to see a sharp increase in bad loans due to unpaid debts and the impact of high interest rates, says the Financial Times…
As for major market strategists, Michael Wilson of Morgan Stanley believes that American stocks will only continue their 2023 rally if economic growth resumes. Goldman Sachs’ strategy teams believe that company results could exceed expectations this year…
Values
Boeing weighs heavily on Wall Street today, losing more than 7%. If, by some miracle, the incident that occurred on Friday on an Alaska Airlines B.737 Max 9 departing from Portland did not cause any injuries, the event will not be without consequences for the American giant. In addition to the new blow in terms of image for Boeing’s best-seller after previous quality and compliance problems encountered by the aircraft, the plane is now grounded in the United States. The American Federal Aviation Administration has in fact ordered the temporary immobilization of the 171 B.737 MAX 9s in service for inspection, after the Alaska plane lost an important fuselage part, leaving a hole rectangular in the cabin and forcing the crew to make an emergency landing. “We have grounded the affected aircraft, and they will remain grounded until the FAA is satisfied that they are safe,” the regulator said on Sunday.
Merck (-1%), the American pharmaceutical laboratory, has confirmed the acquisition of the ‘biotech’ Harpoon Therapeutics (+111%) for $23 per share, or nearly $700 million in total. Harpoon is an immuno-oncology group. Merck’s offer represents a 118% premium to Friday’s closing prices, with Harpoon listed on the Nasdaq. The acquisition includes HPN328, an investigational T-cell activator-targeting DLL3 treatment being evaluated in select patients with small cell lung cancer and neuroendocrine tumors. “At Merck, we continue to enhance our oncology product portfolio through strategic acquisitions that complement our current portfolio and advance groundbreaking science to help meet the needs of people with cancer around the world,” said Dr. Dean Y. Li, president of Merck Research Laboratories.
Johnson & Johnson (-1%), American pharmaceutical and medical giant, for its part accepted the acquisition of the Ambrx Biopharma group (+100%) for $28 per share, again a premium of more than 100% and a transaction amount of approximately $2 billion. Ambrx is a developer of cancer treatments. The cash transaction presents a premium of 105% to the January 5 close. “We are pleased to enter into this agreement with Johnson & Johnson to advance scientific research aimed at treating cancers with significant unmet need,” said Daniel J. O’Connor, Chief Executive Officer of Ambrx.
Boston Scientific (stable) revealed an agreement to acquire Axonics (+20%) for approximately $3.7 billion in cash, or $71 per share. Boston Scientific Corporation has entered into a definitive agreement to acquire Axonics, Inc., a publicly traded medical technology company primarily focused on the development and commercialization of differentiated devices to treat urinary and intestinal problems. “We are excited to add Axonics technologies to the Boston Scientific portfolio, a combination that we hope will further strengthen our ability to serve urologists who treat patients living with these often chronic diseases,” said Meghan Scanlon, Senior Vice President and President Urology, at Boston Scientific. The premium is 22%.
BlackRock (+1%), the American asset management giant, plans to cut around 3% of its global workforce according to Fox Business. A source told Fox that the reduction of approximately 600 employees in the workforce is described internally as “routine,” following a series of similar layoffs last year, determined by employee performance metrics. The article reports that the layoffs are expected to be announced in the coming days.
Tesla (stable). Tesla and SpaceX executives are reportedly concerned about Elon Musk’s alleged drug use, report Bloomberg and the Wall Street Journal. Citing people familiar with Musk, Tesla and SpaceX, a WSJ report notes that Musk’s alleged drug use – including LSD, cocaine, ecstasy, ketamine or psychedelic mushrooms – is believed to be ongoing. According to the article, former Tesla director Linda Johnson Rice reportedly did not seek re-election in 2019 due to her frustration with Musk’s behavior and concerns about his drug use. In response to the article, Musk tweeted: “After that puff with Rogan, I agreed, at NASA’s request, to do 3 years of random drug testing. No trace of drugs or alcohol was not found.” Remember that Musk then surprised by “shooting” on a cannabis joint live during the very popular podcast of comedian and presenter Joe Rogan…
The Wall Street Journal specifies for its part that Musk’s supposed drug consumption would therefore worry the managers and members of the boards of directors of the companies he manages. The WSJ cites unidentified people close to the billionaire and the companies. Musk allegedly used LSD, cocaine, ecstasy and psychedelic mushrooms, often at private parties, the newspaper said, citing anonymous witnesses and others with knowledge of the matter. People close to Tesla and the SpaceX CEO told the newspaper that he still uses drugs, particularly ketamine.
Apple (+1%) is worrying analysts at the start of 2024. After two downgrades of brokers last week (Barclays and Piper Sandler), it is Jefferies’ turn to sound the alarm. The broker judges that the decline in iPhone sales in China is increasing. This analysis by Edison Lee and his team is relayed by Bloomberg. The latest generation of iPhones thus had an atypical start in China last year, which recently extended to a drop of 30% year-on-year according to Lee, who cites industry controls. The rest of the country’s mobile market would have seen growth in December, with Huawei posting the fastest growth with the new Mate 60 range. Apple, for its part, would have recorded a double-digit volume decline in December in China, and Jefferies forecasts a similar decline for 2024.
Apple nevertheless benefits today from the announcements of Tim Cook, general manager of the Californian group from Cupertino, who has just indicated on X, the former Twitter: “The era of spatial computing has arrived! Apple Vision Pro will be available in the United States on February 2. This is therefore good news for fans of the Apple group, the mixed reality headset constituting the first new category of Apple products since the Apple Watch in 2015. The group unveiled the Apple Vision Pro in June 2023. He then described the headset as “a revolutionary spatial computer that seamlessly integrates digital content with the real world, while allowing users to be present and connected to the people around them”. However, analysts do not expect any significant impact on the group’s accounts in the short term, particularly due to the high price of the product. The Vision Pro, priced from $3,499, can be pre-ordered from January 19.
Nvidia jumped nearly 5% from $514 on Wall Street, to its all-time high, for a capitalization of nearly $1,300 billion. The group plans to launch mass production of its new AI chip intended for China in the second quarter of 2024 and complying with American rules on exports of advanced chips. At least that’s what Reuters says. Citing two people familiar with the matter, the agency specifies that the H20 chip will be designed to comply with new US regulations on exports of high-tech equipment to China. The initial shipment volume will be limited and will mainly fulfill orders from major customers, Reuters said.
Moderna (+2%) revealed preliminary annual sales of its Covid-19 vaccine above the lower limit of its guidance at $6.7 billion. The group intends to return to growth in 2025. In November, the laboratory indicated that it expected revenues at the bottom of its forecast range. The $6.7 billion in preliminary sales announced includes about $600 million in deferred revenue related to Moderna’s efforts under the GAVI alliance, according to Reuters.
