Once again heckled yesterday, Wall Street moved little in pre-session this Friday. It must be said that while investors were caught up in the doubt surrounding the Fed’s next rate cut, the publication of the PCE inflation index, the Federal Reserve’s favorite indicator of price dynamics , at 2:30 p.m., attracts all the attention. A lower-than-expected index would make it possible to revive bets on a reduction in rates over the coming months, while a bad surprise would undoubtedly postpone the Fed’s next monetary easing indefinitely. Right now, the market is pricing in a roughly 45% chance of a 25 basis point rate cut in September (according to Fedwatch).
On the political front, Donald Trump on Thursday became the first former president of the United States to be convicted of a criminal crime, with a New York jury finding him guilty of falsifying documents to hide bribes. bribes paid to a former porn star in order to buy his silence before the 2016 US presidential election. Judge Juan Merchan set the hearing for July 11 at which the former porn magnate’s conviction real estate will be known, four days before the start of the national convention of the Republican Party during which Donald Trump must formally be inaugurated as the party’s candidate for the presidential election next November. Donald Trump, 77, denies any wrongdoing. One of his lawyers has indicated his intention to file an appeal quickly.
In today’s macro agenda, in addition to the PCE price index, operators will take note of the evolution of household income and spending in April and the Chicago PMI manufacturing index for May.
On the bond market, the US 10-year rate rose another 1.4 basis points to 4.560%. The dollar index changes little against a basket of currencies and Bitcoin takes 0.4% to 67,930 dollars on Coindesk. An ounce of gold is stable at $2,343. Finally, on the oil market, a barrel of WTI crude is stable at $77.9 on the Nymex before the OPEC+ meeting this weekend.
Values
* Dell Technologies collapses 13% in pre-session on Wall Street, the first increase in revenue since 2022 not enough to impress investors whose expectations around the AI server business are very high. The IT giant reported sales up 6.3% for the quarter ended May 3 to $22.2 billion, compared to a consensus of $21.6 billion. Adjusted earnings per share came to $1.27, compared to an average projection of $1.23. Revenue from Dell’s powerful servers equipped to handle artificial intelligence tasks more than doubled from the previous quarter to $1.7 billion, and the order backlog for these machines increased by more than 30%. % quarter over quarter to reach $3.8 billion. But adjusted operating profit fell 8% to $1.5 billion, leading to a decline in the margin.
The company raised its revenue forecast for the fiscal year ending February 2025 to a range of $93.5 billion to $97.5 billion, an 8% increase at the mid-range, from a 7% gain. anticipated by the market. Adjusted earnings will be about $7.65 per share, compared with the average estimate of $7.70. But Dell also said its profit for the current quarter will be lower than market estimates and signaled that higher costs to build servers capable of handling heavy AI workloads will reduce annual margin. The Round Rock-based firm therefore expects the adjusted gross margin rate to decrease by approximately 150 basis points during fiscal 2025. It also expects adjusted EPS of $1.65, plus or minus 10 cents, for the current quarter, against a consensus of $1.84.
“Given inflationary input costs, the competitive environment and a greater mix of AI-optimized servers, we expect our gross margin rate to decline,” said CFO Yvonne McGill, during the presentation conference. However, she expects the dynamic demand for AI to continue throughout the year. Dell shares have more than tripled in the past 12 months as investors view the computer hardware maker as a beneficiary of demand for artificial intelligence. Large companies increasingly need high-powered servers to train and run demanding generative AI tasks, which are sold by Dell and a few other companies. “The results were not bad, but expectations were very high and the numbers were not strong enough to stimulate further growth in the short term,” says Vital Knowledge as quoted by ‘Bloomberg’. “The decline in their margin reflects the competitive pricing environment, as the market has not yet fully recovered and Dell’s competitors have attempted to grab share in this tight market,” adds Mikako Kitagawa, senior analyst at Gartner.
* Costco falls before the stock market on Wall Street despite better than expected results. The American distribution giant based on the warehouse club model accessible by membership to individuals and professionals reported an EPS of $3.78, compared to $2.93 a year ago and $2.70 of consensus, for a net turnover of $58.52 billion (+9.1%), against an estimate of $57.98 billion. Same-store sales, excluding fuel, jumped 6.5% (+5.9% consensus), driven by growth in its international activities (up 8.5%), in Canada (up 8.5%), 7.4%) and in the United States (up 6%). “We are definitely winning in the consumables sector, because we see that the food and out-of-home sector has calmed down a little bit,” CEO Ron Vachris, who took office in January, said during a conference with investors. Costco, which is trading at its highest on the stock market, had 74.5 million total paying members at the end of its third fiscal quarter, including 34.5 million executive members.
