Wall Street progressed on Monday before an avalanche of company publications: The S&P 500 gained 0.76% to 4,927 pts and the Dow Jones gained 0.59% to 38,333 pts, compared to an increase of 1.12% on the Nasdaq at 15,628 pts. The news will therefore be very busy this week, with the Fed meeting, a new battery of economic statistics, as well as numerous financial results from several large technological stock market capitalizations… Among the “Magnificent Seven”, 5 will publish their accounts , namely Apple, Alphabet, Amazon, Meta and Microsoft. Tesla having already published its figures last week, then only Nvidia will remain to follow at the end of February, the star of graphics chips and AI revealing its figures well after the end of the “season”…
Note that this week, the results announcements will concern around 40% of the capitalization of the S&P 500, including the two heavyweights worth nearly 3,000 billion dollars, Apple and Microsoft.
In economic news, the Dallas Fed’s regional manufacturing index for the month of January 2024 was heavily negative, at -27.4 compared to -10.4 a month earlier (revised reading), signaling a very sharp contraction in manufacturing activity in the region considered. The FactSet consensus was -5. The production index plunged to -15.4 whereas it was slightly positive a month before.
Operators will monitor the Case-Shiller and FHFA home price indexes on Tuesday, as well as the Conference Board’s consumer confidence index and the JOLTS report on job openings in the United States.
On Wednesday, investors will watch the ADP report on US private employment, the employment cost index, the Chicago PMI index and the weekly report on US domestic oil stocks, but it is mainly the Fed meeting which will attract attention in the evening. According to the FedWatch tool, the probability that the Fed will leave its rates unchanged between 5.25 and 5.50% is at 97%, but it is above all the vocabulary of Jerome Powell’s Fed which will decide the direction of the rates. markets. Investors are indeed hoping for a rate cut in March or May. The probability of a quarter-point cut in the fed funds rate on March 20 is 48% according to FedWatch…
On Thursday, operators will follow the Challenger, Gray & Christmas study on layoff announcements in the United States, weekly unemployment claims, figures for non-agricultural productivity and unit labor costs, and the final manufacturing PMI index. , the manufacturing ISM and construction spending. Finally, on Friday, the monthly government report on the employment situation for the month of January, the consumer sentiment index from the University of Michigan and industrial orders will be in the news.
Regarding the quarterly financial publications on Wall Street, Tuesday, Danaher, Pfizer, UPS, HCA Healthcare, Marathon Petroleum, General Motors, Sysco, Johnson Controls, Corning or PulteGroup will publish their accounts before market, while the evening will be very lively with Microsoft, Alphabet, AMD, Starbucks, Stryker, Mondelez, Electronic Arts, Juniper, Match Group, Fortune Brands or Chubb.
On Wednesday, Mastercard, Thermo Fisher Scientific, Boeing, Automatic Data Processing, Boston Scientific, Phillips 66, Roper, Hess, Otis, Nasdaq Inc and Rockwell Automation, will announce before market, while Qualcomm or Metlife will be there after market… On Thursday, Merck, Honeywell, Eaton, Ferrari, Illinois Tool Works, Altria, Becton, Dickinson, Parker-Hannifin, Royal Caribbean Cruises, Cardinal Health, Sirius the giants Apple, Amazon and Meta Platforms will publish after the closing…
Finally, on Friday, ExxonMobil, AbbVie, Chevron, Regeneron, Bristol-Myers Squibb, Cigna and Charter Communications will announce their latest quarterly figures.
On the Nymex, a barrel of WTI crude lost 1% to $77. The dollar index advances 0.3% against a basket of currencies.
Values
Apple (-0.3%) despite a more favorable recommendation from Baird who has just adjusted its price target on the value of the Californian Cupertino group from $186 to $200, while Apple will publish its latest financial results on Thursday evening quarterly. Remember that the group is struggling with the slowdown in sales in China and antitrust accusations. It could, however, give investors a better idea of early demand for its Vision Pro mixed reality headset, which some big-name developers are avoiding.
Spotify (+2%), the music streaming group reacts to the changes proposed by the Californian giant from Cupertino in connection with the European Digital Markets Act: “Although they have behaved badly for years, this raises the level “arrogance to a whole new level. Under the false pretense of compliance and concessions, they have presented a new plan that is a complete and utter farce,” Spotify explains. “Essentially, the old tax was made unacceptable under the DMA, so they created a new one under the guise of compliance with the law…” Earlier this week, thanks to the plain language of the DMA, we explained how we planned to offer EU customers more choice, more control, and better experiences. Today, that future is less clear,” adds Spotify, as Apple considers new fees for downloads in outside the App Store.
Microsoft (+1.4%). The Italian data protection authority has told ChatGPT creator OpenAI that its AI chatbot violates data protection rules. Reuters reports that following an investigation launched last year, the Italian regulator therefore judged that elements would indicate potential violations. OpenAI has thirty days to present its defense. The Italian authority briefly banned ChatGPT last year due to alleged violations of European rules on private data.
Western Digital (+2.6%). Bain Capital plans to restart negotiations on the Western Digital-Kioxia merger, says Kyodo News, citing sources and reported by Reuters. Kyodo reports that Bain Capital, a shareholder of Japan’s Kioxia Group, is in talks with SK Hynix to resume merger negotiations between the two companies. In October, Western Digital and Kioxia ended merger talks after failing to gain support from Kioxia shareholder SK Hynix. The latter invested nearly $2.7 billion in Kioxia in 2018 as part of a consortium led by Bain, which acquired the Japanese firm from Toshiba. SK has convertible bonds which could give it 15% of the capital of Kioxia and make its agreement essential to achieve a merger.
United Airlines (-1%) has started discussions with Airbus due to delays from Boeing (-0.1%), according to the Reuters agency. Industry sources said United Airlines had contacted Airbus about purchasing additional A321neo aircraft to fill the gap created by delayed Boeing 737 MAX 10 orders. Scott Kirby, CEO of United, reportedly went to Toulouse a short time ago to question Airbus on the issue. It would therefore be a question of finding alternatives to the problems encountered by Boeing. The discussions would be preliminary, with no guarantee that an agreement would be reached.
AMD (+0.3%) benefits from several upward adjustments from brokers… Specialists are in fact raising their price targets, while the file has gained 20% in one month with the euphoria around AI and demand for advanced chips. According to market sources, Susquehanna increased its target price on AMD from $170 to $210, while Bank of America increased its target from $165 to $195. AMD publishes its quarterly accounts Tuesday evening, after market trading.
The Biden administration would also provide billions of dollars in subsidies to chipmakers in the coming weeks, according to Reuters. Citing industry executives familiar with the negotiations, a news report said that under the ‘Chips Act’ and in an effort to produce more advanced semiconductors in the United States, Intel (+0.4% ) and Taiwan Semiconductor (+1.1%) would notably obtain subsidies for new factories, and that Micron, Texas Instruments and GlobalFoundries could also obtain funds.
Lockheed Martin (-0.4%), the American defense contractor will cut around 1% of its workforce in order to reduce its expenses, according to Reuters. The cuts will take place during the year, the agency citing a company spokesperson on the subject. Hiring freezes and voluntary separations are notably on the agenda. The contractor currently employs just over 120,000 people worldwide.
Amazon (+1.3%) and iRobot (-8.7%), the designer of Roomba vacuum cleaners, have announced the abandonment of their merger plans, facing opposition from European antitrust regulators. Amazon indicated that the $1.4 billion operation did not have an approval pathway in the European Union. The transaction was initially revealed in August 2022…
