Wall Street is now in the green today, following contrasting statistics. The S&P 500 advanced 0.28% to 5,111 pts, while the Dow Jones gained 0.06% to 39,020 pts. The Nasdaq gained 0.41% to 16,158 pts. Nasdaq 100 and S&P 500 had already reached new highs yesterday evening, following the announcement of a ‘core PCE’ price index in line with market expectations, somewhat calming fears linked to inflation. The markets remain supported by Nvidia and the technology rating, driven by enthusiasm around artificial intelligence… On the Nymex, a barrel of WTI crude gained 2.7% to $80.4. An ounce of gold advances 0.9% to $2,073. The dollar index lost 0.2% against a basket of reference currencies.
On the economic front today on Wall Street, the final American manufacturing PMI index for February came out at 52.2, against a market consensus of 51.5 and a previous reading of 51.5 as well. The index therefore signals an expansion in national manufacturing activity in February.
The American ISM manufacturing index for February stood at 47.8, in a contraction zone below the 50 mark, while the market consensus stood at 49.5. The indicator was 49.1 a month earlier. The new orders indicator stood at 49.2 compared to 52.5 in January.
The final index of American consumer sentiment from the University of Michigan for the month of February 2024 stood at 76.9 in final reading against 79.6 of market consensus. The preliminary index stood at 79.6.
Thomas Barkin, Christopher Waller, Lorie Logan, Raphael Bostic, Mary Daly and Adriana Kugler from the Fed speak today. Barkin, president of the Richmond Fed, was quite inflexible, refusing to say that there would be rate cuts this year. According to him, this will depend on the progress recorded on the inflation front. He adds that he is in no hurry to lower rates at the moment… Governor Waller and Dallas Fed President Lorie Logan have indicated that they see monetary tightening as quantitative (QT) continue at a more moderate pace. “(The Fed’s) balance sheet plans are aimed at achieving adequate liquidity levels,” Waller said at a monetary policy conference hosted by the Clark Center for Global Markets. “They do not imply anything about the direction of interest rate policy, which is focused on influencing the macroeconomy and achieving our dual mandate,” the official explained.
Raphael Bostic, Austan Goolsbee, John Williams and Loretta Mester spoke yesterday. Bostic, president of the Atlanta Fed, said it would likely be appropriate for the Fed to begin cutting rates this summer based on its inflation outlook. Goolsbee, head of the Chicago Fed, said the environment was restrictive and the impact of the supply shock on inflation was taking time to materialize. He says the disinflation benefits of the supply chain are yet to come. It also notes significant long-term progress regarding inflation. Goolsbee remains concerned about possible external shocks… Williams has noted remarkable resilience in the economy. The head of the New York Fed judged that the central bank could take its time to decide on the next monetary movement. He anticipates rate cuts later this year… Finally, Mester, head of the Cleveland Fed, estimated that three rate cuts seemed appropriate in 2024. She indicates that a slowdown in the job market would be welcome to implement these relaxations…
According to the CME Group’s FedWatch tool, the probability of an additional monetary status quo leaving the range on the fed funds rate between 5.25 and 5.50% on March 20, at the end of the next monetary meeting, is over 97%. The probability that rates will still remain unchanged on May 1 after the next meeting reaches more than 75%. The first monetary easing could take place on June 12.
Values
Dell Technologies jumps 26% on Wall Street. The Texan IT giant is counting on revenues and profits higher than expected, with demand for artificial intelligence servers – equipped with Nvidia chips (+2%). “Our strong momentum in AI-optimized servers continues, with orders growing nearly 40% sequentially and backlog nearly doubling, closing our fiscal year at $2.9 billion,” said Director of Operations Jeff Clarke. In addition, the PC market is also showing some signs of recovery, with Dell management banking on the upcoming refresh cycle and the impact of AI on the PC segment…
For the fourth fiscal quarter ended in early February, Dell posted revenues down 11% to $22.3 billion, compared to a consensus of around $22.2 billion. Adjusted earnings per share clearly exceeded expectations, at $2.20 versus $1.73 consensus. In detail of revenues, the turnover of the infrastructure solutions segment fell by 6% to 9.3 billion, while the turnover of the group dedicated to ‘client solutions’ fell by 12% to 11.7 billion. For the current fiscal year, Dell is on the offensive and is counting on revenues ranging from 91 to 95 billion dollars, compared to a consensus of 92 billion. Annual adjusted earnings per share are expected at $7.50, plus or minus 25 cents, versus $7.15 consensus.
Autodesk (+2%), the American software publisher known for its AutoCAD product, is climbing on Wall Street, while its revenues and profits for the fourth fiscal quarter exceeded market expectations. Over the period, adjusted earnings per share were $2.09, compared to less than $2 consensus and $1.86 a year earlier. The San Francisco group’s revenues totaled $1.47 billion, up 11% year-on-year. For its first fiscal quarter 2025, Autodesk forecasts adjusted earnings ranging from $1.73 to $1.78 per share on revenues of $1.385 billion to $1.4 billion. The group envisages 2025 adjusted annual EPS of $7.89 to $8.11, and revenues ranging from $5.99 to $6.09 billion, which would represent growth of 9 to 11%.
Zscaler, an American cloud security specialist, lost 8% on Wall Street. However, the group posted quarterly accounts higher than expectations and raised its forecasts. For its second fiscal quarter, the group posted adjusted earnings per share of 76 cents, compared to 58 cents consensus and 37 cents a year earlier. Revenues were $525 million (+35%), beating consensus by more than 3%, compared to $388 million a year earlier. For the third fiscal quarter, the group forecasts revenues of 535 million in the middle of the range, in line with expectations. The annual sales guidance is raised to $2.12 billion for the mid-range. The Californian group anticipates adjusted EPS ranging from $2.73 to $2.77 for the year. The consensus was around $2.50.
NetApp climbs 25% on Wall Street. For its third fiscal quarter 2024, the group announced revenues of $1.61 billion (+5%), compared to a consensus of $1.59 billion. Adjusted earnings per share were $1.94 compared to $1.37 a year earlier. The consensus was for $1.69 quarterly adjusted EPS. For the 2024 financial year, NetApp is boosting its forecasts and now says it is considering adjusted earnings per share ranging from $6.40 to $6.50, well above the consensus ($6.15). The Californian group is benefiting from demand for its cloud-based data solutions. For the fourth quarter alone, adjusted EPS is expected between $1.73 and $1.83, compared to a consensus of $1.73.
Hewlett Packard Enterprise (+2%) revealed quarterly financial results and forecasts without much relief. The group posted adjusted earnings per share of 48 cents, for revenues of $6.76 billion compared to a consensus of $7.1 billion. Adjusted earnings per share were expected between 42 and 50 cents, while revenues were expected between 6.90 and 7.30 billion. HPE also lowered its revenue and profit forecasts for the current fiscal year, with weakening demand for networking products and lack of availability of computer chips. Revenues are expected to rise up to 2%, excluding currency fluctuations, for the year ending in October. Previously, HPE forecast annual sales growth of 2-4%. Profit excluding items would be between $1.82 and $1.92 per share, again a downward revision.
Recall that Hewlett Packard Enterprise acquired network equipment manufacturer Juniper Networks, a small rival of Cisco, for around $14 billion, in order to strengthen its artificial intelligence offerings.
Veeva Systems (+2%), an American software group that provides cloud solutions to the pharmaceutical industry, exceeded market expectations for its fourth fiscal quarter. Quarterly revenues were $631 million, up 12%, compared to a consensus of $621 million. Adjusted earnings represented $1.38 per share, compared to $1.15 per share a year earlier and $1.30 consensus. For the financial year ending January 2025, the group expects revenues of $2.725 billion to $2.74 billion, as well as adjusted EPS of $6.16.
New York Community Bancorp, the most feared regional American bank of the moment, still stumbles by 22% on Wall Street. The group has just announced the departure of its general manager Thomas Cangemi as well as weaknesses in internal control and a tenfold increase in its quarterly loss to $2.7 billion! As a result, the commercial real estate lender discovered significant weaknesses in the way it tracks loan risks. He also depreciated the value of companies acquired years ago and is therefore carrying out a management change. Alessandro DiNello takes over as CEO effective immediately. Impairments related to past transactions amounted to $2.4 billion, with no impact on capital ratios or credit agreements. The institution expects to miss the annual report filing deadline as it tightens controls.
Microsoft (stable). Elon Musk, the boss of Tesla and SpaceX, is suing the creator of ChatGPT, OpenAI, and its CEO Sam Altman, believing that the company has abandoned its initial mission of developing artificial intelligence for the benefit of humanity. This is what the Reuters agency indicates today. According to the action launched yesterday Thursday, Altman and OpenAI co-founder Greg Brockman initially approached Musk to design an ‘open source’ and non-profit firm. OpenAI, now supported by Microsoft, would have violated its initial contract, since the company would now be oriented towards generating profit. This desire by OpenAI to make money would violate the initial commitment, Musk’s lawyers said, cited by Reuters, as part of this lawsuit filed in San Francisco. Recall that Elon Musk co-founded OpenAI in 2015, but then resigned from the board of directors in 2018.
Archer Daniels Midland (+3%), a US agricultural trader, said it had delayed the release of its annual report and warned that it planned to report a material weakness in the company’s internal financial reporting practices.
