Wall Street ends the session on a new note of optimism, with its three main indices in the green. The S&P 500 gained another +1.03% to 5,157 pts, ending on a closing record. The Dow Jones is more timid, but remains firm with an increase of +0.34% to 38,791 pts. The Nasdaq rose 1.51% to 16,273 pts, once again supported by Nvidia which posted yet another historic high, above $900. Wall Street is also being carried away by Jerome Powell’s statements. Already yesterday, the head of the Fed had rather reassured the markets at the mention of a future rate cut.
Despite still-mixed indications on inflation, Fed Chairman Jerome Powell told House lawmakers yesterday that peak rates had likely been reached and that rate cuts were likely “at some point.” given” in 2024. The US central bank should proceed cautiously, however, when assessing whether inflation is slowing appropriately. “If the economy generally performs as expected, it will likely be appropriate to begin to ease monetary policy tightening at some point this year,” Powell said during remarks before the House Financial Services Committee. The FOMC does not expect it to be appropriate to narrow the target range until it gains greater confidence that inflation is moving sustainably toward the 2% target. , added Powell.
The hearing of the Fed boss by lawmakers in the House of Representatives comes two weeks before the next monetary meeting, at the end of which officials are expected to keep rates stable for the 5th consecutive meeting, between 5.25 and 5.50 %, to the highest in more than 20 years.
Powell specifies that inflation has improved significantly, but remains above the long-term objective of 2%. Demand on the labor market always exceeds supply, and the market therefore remains quite tight. Powell also notes the more general resilience of the economy and consumption. He judges that progress has been considerable over the past year regarding the Fed’s dual mandate relating to employment and inflation (price stability). Nevertheless, Powell highlights economic uncertainties and does not take for granted the return of inflation towards the target… The Fed leader sees risks in a premature reduction… but also in a too late reduction of rates .
The Fed will carefully evaluate the new data. The central bank indeed needs a greater degree of confidence in the sustainable return of inflation towards the objective before proceeding with easing. Thus, the American monetary authority should not rush before adjusting rates downward. Potential rate cuts will depend on the trajectory of the economy and inflation. The FOMC, the Fed’s monetary committee, would indeed like to observe additional data confirming disinflation. In the meantime, the strength of the economy and the resilience of the labor market allow the central bank to proceed cautiously.
This Thursday, Powell speaks again before the Senate Committee on Banking, Real Estate and Urban Affairs. He specifies that if the economy develops as expected, rate cuts could begin this year. He adds that the Fed is independent and intends to stay out of political issues. Thus, the Fed’s helmsman generally confirms his speech from the day before, specifying that the central bank stands ready to cautiously lift its restrictive policy. Jerome Powell confirms that the rate peak has probably been reached and that further easing will depend on data and the economy, which remains uncertain.
On a purely macroeconomic level, according to the latest Challenger study, announcements of layoffs by companies in the United States for the month of February 2024 concerned 84,638 people, compared to 82,307 employees a month earlier. Compared to February 2023, these layoff announcements increased by almost 9%. The technology sector is the most affected, with 12,412 positions affected in February and 28,218 this year.
Unemployment claims remained stable last week in the United States. The US Department of Labor announced unemployment claims for the week ending March 2 at 217,000, identical to the revised level of the previous week. The consensus was positioned at 215,000. The four-week average stands at 212,250, down by 750. Finally, the number of unemployed workers receiving compensation for the week ended February 24 stands at 1.906 million, an increase of 8,000 over seven days (1.889 million consensus).
According to today’s government report, American non-agricultural productivity for the 4th quarter of 2023, in final reading, showed growth at a rate of 3.2% (3.1% consensus and 3.2% for the ‘previous assessment). Unit labor costs increased at a rate of 0.4%, compared to the market consensus of 0.7% and the previous estimate of 0.5%.
According to today’s report, the American deficit in international trade in goods and services for the month of January 2024 stood at $67.4 billion, compared to $63.5 billion in the FactSet consensus and $64.2 billion for the reading. revised from the previous month.
Tomorrow Friday, the US Department of Labor will publish its monthly report on the employment situation for the month of February (FactSet consensus 200,000 non-agricultural job creations, 3.7% unemployment). John Williams of the Fed will also speak during the day.
On the oil side, a barrel of WTI crude climbed 0.76%, to $79.69.
The dollar exchanges for 0.9136 euros.
An ounce of gold remains high, at $2,159, as does Bitcoin at $66,050.
Values
* Nvidia (+4.47% to $926.67). The stock crossed $900 at the start of the session on Wall Street. The record of the leader in graphics and AI chips is obviously at its historic peak in the American market, boosted by demand for artificial intelligence products. The capitalization reached a dizzying level of 2,300 billion dollars, which makes Nvidia the 3rd capitalization on Wall Street behind Microsoft and Apple. Mizuho has also just raised its price target on Nvidia from $850 to $1,000 while maintaining its buy recommendation. The intermediary also increases its target price on AMD from $200 to $235, with also a purchase advice.
* Kroger (+9.88% to $55.48). The American distribution chain expects adjusted earnings per share ranging from $4.30 to $4.50 for the 2024 fiscal year, which has just begun, compared to a market consensus of $4.28. In the fourth fiscal quarter of 2023 which has just ended, the group achieved adjusted earnings per share of $1.34, compared to a consensus of $1.12 and a level of $1.14 a year before. Revenues were $37.1 billion, while analysts on average expected a level of $36.7 billion. Like-for-like sales excluding gasoline for the next financial year are expected to increase modestly by 0.25 to 1.75%. Adjusted free cash flow is expected between $2.5 and $2.7 billion.
* BJ’s Wholesale (+9% to $78.86). The American chain of members-only warehouse clubs announced adjusted earnings per share of $1.11 for its 4th fiscal quarter, an increase of 11% year-on-year, for revenues of $5.36 billion, an increase of 8 .7%. The consensus was for $1.06 in adjusted earnings per share for $5.39 billion in revenue. Comparable club sales, excluding gasoline sales, increased 0.5% year-over-year, driven by accelerating traffic. Membership dues revenue increased 6.5% year over year to $108.4 million. The group achieved a renewal rate of full members of 90% for the 2023 financial year. Profit from continuing activities was $145.9 million. BJ’s has opened 6 new clubs and 6 new gas stations since the 3rd quarter.
* New York Community Bancorp (+5.78% to $3.66). America’s most fragile financial institution today announced the appointment of a new CEO as well as a $1 billion cash injection from a group of investors including former US Treasury Secretary Steven Mnuchin. The stock moved very erratically on Wednesday (+7.5% at closing). After an early session high around $4 today, speculation calmed down a little after the announcements.
NYCB is raising $1 billion from investors including Liberty Strategic Capital, a firm linked to Mnuchin, Hudson Bay Capital, Citadel Global Equities, Reverence Capital Partners, as well as other institutional investors and bank executives. The regional bank also announced that former Comptroller of the Currency Joseph Otting would join the board. He would become general manager of the establishment. Mnuchin will also be appointed to the council. The foundations therefore seem to be laid so that the bank – which has just lost 7% of its deposits in one month – can clean up its situation.
* Alphabet (+2.27% to $134.38). Linwei Ding, a 38-year-old Chinese national and resident of Newark, California, hired by Google in 2019, was charged with four counts of theft of trade secrets. “We allege that the defendant stole trade secrets related to artificial intelligence from Google while secretly working for two companies based in China,” Attorney General Merrick Garland said, as quoted by Bloomberg. “We will fiercely protect sensitive technologies developed in America from falling into the hands of those who should not have them,” Garland added. A Google spokesperson, also quoted by Bloomberg, said that Ding acted alone and that the company was able to intervene quickly after discovering the problem and refer the matter to law enforcement.
* Victoria’s Secret (-29.73% to $18.01). Huge villain on Wall Street for the American lingerie brand. The group has nevertheless published adjusted operating profit and adjusted earnings per share for its fourth fiscal quarter “at the top of the forecast range”. It also generated $590 million in operating cash flow over the quarter, and announced a new share buyback authorization of $250 million. For the quarter ended, net profit represented $181 million, or $2.29 per share ($173 million a year earlier). Operating profit was $258 million ($243 million a year earlier). Adjusted net profit came to $204 million, or $2.58 per share. Quarterly revenues increased by 3% to $2.082 billion. The consensus was for $2.47 adjusted EPS and $2.09 billion in sales.
On the other hand, the annual forecasts for 2024 disappoint. For this new financial year, sales are anticipated at $6 billion, down “in the low single digits”, for adjusted operating profit ranging from $250 to $275 million. The first fiscal quarter should be particularly difficult with an expected drop in revenue of around 5%, and adjusted operating profit of $10 to $35 million.
* Ciena (-14.72% to $52.84). The American network equipment manufacturer plunges after announcing for its first fiscal quarter 2024, ended at the end of January, revenues of $1.04 billion, as well as adjusted earnings per share of 66 cents. The consensus was for 48 cents in adjusted earnings per share on $1.02 billion in revenue. Quarterly consolidated net profit was $49.5 million ($76.2 million a year earlier). Adjusted net profit was $96.8 million, compared to $95.6 million in the corresponding period a year earlier.
* American Eagle Outfitters (-1.92% to $23). The group exceeded expectations in the quarter ended with solid demand. The clothing retailer posted revenues up 12% to $1.68 billion in the fourth fiscal quarter, ended in early February, compared to a market consensus of $1.66 billion. Adjusted earnings per share were 61 cents (50 cents consensus). The group expects revenues for the current financial year to increase by 2 to 4% (2.9% consensus).
