Wall Street remained in the red on Wednesday, despite reassuring minutes from the Fed, with technology stocks remaining controversial in the wake of Apple. The Nasdaq lost another 1.18% to 14,592 points and the S&P 500 -0.8% to 4,704 points, while the Dow Jones lost 0.76% to 37,430 pts.
The day before, it was above all a downgrade from Barclays on the Apple file which had started to worry the markets. The title of the world’s largest stock market capitalization fell 3.6% before losing another 0.7% this Wednesday. Among the ‘Magnificent Seven’, Tesla is also suffering, down 4% as pressure from Chinese manufacturers increases on the electric car market.
The markets were also concerned about the risks of armed escalation in the Middle East after the latest attack which struck Iran and Israel’s recent military initiatives in Lebanon. Enough to bring oil up to $78 per barrel of Brent…
US Federal Reserve officials, on the other hand, seemed more convinced than ever that inflation was on the way to being under control, noting lower risks in the Fed’s final minutes, and expressing concern about the possible economic consequences. of an “excessively restrictive” monetary policy…
Therefore, according to this report from the December meeting of the US central bank, published Wednesday evening, “almost all participants indicated that a lower interest rate target would be appropriate by the end of 2024” …A “certain number of participants” highlighted the persistent uncertainty over the duration of maintaining a very strict policy, due to the progress made in the fight against inflation within the framework of the tightening cycle monetary policy started in March 2022, it is still written in these “minutes”.
At the end of its meeting on December 12-13, the Fed kept its interest rates unchanged, indicating in its press release that the cycle of monetary tightening was coming to an end and signaling a future rate cut for the coming year… Illustration of the progress made by the institution to control the surge in prices, Fed officials this time did not qualify inflation as “unacceptably high”, a first since June 2022!
This report from the December meeting, however, does not give any details on the rate cut timetable envisaged by the Fed in 2024. Central bank officials, however, noted “an unusually high degree of uncertainty” regarding the horizon. economic. Participants in the meeting also “emphasized that it would be appropriate for policy to remain restrictive for some time, until inflation clearly declines toward the Fed’s 2% target.”
On the economic front across the Atlantic, the American ISM manufacturing index for December 2023 stood at 47.4, in a contraction zone below the 50 mark, but above the market consensus measured by FactSet, which was 47.1. A month before, the indicator stood at 46.7. The new orders index was 47.1 compared to 48.3 in November.
According to the US Department of Labor on Wednesday, job openings in the United States for the month of November 2023 stood at 8.79 million, compared to the FactSet consensus of 8.76 million and 8.85 million a month earlier. , in revised reading.
Remember that during the last Fed meeting, the monetary authority opted for a status quo, leaving its rates unchanged between 5.25 and 5.5%. Operators also welcomed a much more flexible speech from Jerome Powell, the boss of the American monetary institution. According to the CME Group’s FedWatch tool, it is very likely that the Fed will still maintain its rate range on January 31 (91% probability), after the next monetary meeting, before probably proceeding on March 20. , at the following meeting, to a first relaxation bringing the rates between 5 and 5.25%…
Note also that Thomas Barkin of the Fed spoke in public… Inflation and the economy will determine the path to follow in terms of monetary policy, said the head of the Richmond Fed, quoted by Bloomberg. According to him, “a soft landing for the economy is increasingly conceivable.” However, it is not assured, especially as real estate and services could suffer from persistent inflation of 2%. T. Barkin was nevertheless generally confident, judging that the Fed “is making real progress on the inflation front, the economy otherwise remaining healthy.” It notes that six-month core personal consumption expenditure inflation is now “just below” the 2% target. However, the leader indicates that potential further rate increases have not yet been ruled out and that it is too early to make a forecast regarding the monetary decision in March…
On Thursday, investors will follow the ADP report on American private employment, the Challenger study relating to layoff announcements, weekly unemployment claims, the final American composite Markit PMI index (and therefore that of services), as well as than the weekly report relating to US domestic oil stocks. On Friday, the monthly government report on the employment situation, American industrial orders as well as the ISM for services will attract attention…
On the Nymex, a barrel of WTI crude rebounded by almost 5% to nearly $73.45. The dollar index advances 0.3% against a basket of reference currencies. On the bond markets, the yield on the 2-year T-Bond increased to 4.37%, compared to 4% on the 10-year bond and 4.14% on the 30-year bond.
Values
Apple (-0.7%) is still losing a little ground, after having fallen by 3.6% the day before, representing a loss of market capitalization of more than 100 billion dollars on a downgrade of Barclays. DA Davidson is also cautious on Apple stock, starting monitoring at ‘neutral’ with a target price of $166. “Unless Apple breaks its innovation rut, it will be very difficult for this company to accelerate its growth on the innovation side,” DA Davidson said on Yahoo! Finance, about the Californian giant from Cupertino…
Nvidia (-1.2%). The intermediary is no longer interested in the 2023 stock market star Nvidia, giant of graphics and AI chips, since it initiates a ‘neutral’ recommendation and targets $410, a potential drop of 15%.
The broker is, however, interested in Amazon (-1%), an online commerce giant, initiating from a market source a purchase recommendation with a target of $195 offering a nice potential of around 30% on current prices.
Tesla (-4%) sold 94,139 electric vehicles manufactured in China in December, an increase of 69% compared to the previous year, according to data revealed this Wednesday by the China Passenger Car Association and relayed in particular by Reuters… Deliveries of Model 3 and Model Y made in China increased 14% compared to November. This brings sales of Tesla vehicles manufactured in China, including exports, to 947,742 units for the whole year – or 52% of global deliveries from Elon Musk’s group. The Tesla factory in Shanghai is able to produce 1.1 million Model 3 and Model Y units per year, and supplies China, Australia and even Europe.
Chinese competitor BYD, with its Dynasty and Ocean vehicles, delivered 341,043 vehicles in December, representing growth of 13% compared to November and a gain of 45% over one year. BYD had a record quarter with sales of 944,779 new energy vehicles in the fourth quarter, including 526,409 pure EVs, Reuters said based on CPCA data.
In the fourth quarter, Elon Musk’s group produced a total of around 495,000 vehicles and delivered more than 484,000 units. In 2023, vehicle deliveries increased 38% year-on-year to 1.81 million, while production increased 35% to 1.85 million units.
Intel (-1.5%) announced plans to form an independent company in which the processor giant would house its software efforts around artificial intelligence, with the support of asset manager DigitalBridge Group and other investors. The entity would have its own board of directors and Intel would remain a shareholder. The new company would not be listed and would be called Articul8 AI. Arun Subramaniyan, former vice president and director of Intel’s data center and AI business, will become chief executive officer of Articul8.
MicroStrategy fell by 7.8%, after an increase of 8.5% the day before and a jump of more than 370% over one year! The group’s boss, Michael Saylor, will sell nearly $216 million worth of shares according to Bloomberg. MicroStrategy is the main listed holder of Bitcoin. Saylor, its co-founder, acquired 315,000 shares through stock options. A spokesperson for the group cited by Bloomberg indicates that the company had previously mentioned its manager’s plan to sell up to 400,000 shares over the period from January 2 to April 26. The stock is currently trading at its highest level since December 2021, with MicroStrategy benefiting from the rebound in digital currencies. The software group recently increased its position in Bitcoin to more than $8 billion.
Bitcoin, however, fell by more than 6% in 24 hours, back to $42,000 after reaching a 21-month high of $45,000. For its part, ETH lost 6%, XRP 9% and Dogecoin 10%. Litecoin drops 11%… The main cryptocurrencies are correcting their situation, while operators fear a rejection of spot Bitcoin ETFs by the American financial markets authority, the Securities & Exchange Commission. A report from crypto financial services platform Matrixport supports this theory, ruling that the SEC should therefore refuse to approve such ETFs in January. A potential final approval would not come before the second quarter… Coinbase stumbles by 2.9% on Wall Street and Robinhood gives up almost 5% (-4.7%).
