Wall Street appears timidly in the green before market this Thursday, at its peaks with Walmart and Cisco, the day after a rally welcoming reassuring figures for American consumer price inflation. The S&P 500 gained another 0.06%, the Dow Jones 0.03% and the Nasdaq 0.09%. In corporate news, Walmart posted a convincing quarterly performance, which contrasts with the poor US consumption figures published yesterday. Cisco also exceeded expectations…
The ‘meme stocks’ GameStop and AMC remain extremely agitated, currently expected to fall sharply this Thursday and for the second session, following the incredible rally of the last few days supported by speculation from small investors and certain “influencers”.
On the Nymex, a barrel of WTI crude advanced 0.6% to $79.1. An ounce of gold fell 0.3% to $2,387. The dollar index rose 0.1% against a basket of currencies.
Yesterday, the American consumer price index for the month of April 2024 showed an increase of 0.3% compared to the previous month and 3.4% over one year. The market consensus stood at +0.4% month-on-month and +3.4% compared to last year. Excluding food and energy, the CPI increased by 0.3% compared to March and by 3.6% year-on-year, in line with expectations. Thus, after several consecutive bad surprises raising fears of “anchored” inflation, these figures, still very far from the Fed’s objective, were enough yesterday to satisfy and revive hopes for monetary easing.
Retail sales for the month of April in the United States were stable according to the report released yesterday, against +0.4% consensus and +0.6% for the revised reading for the previous month. Excluding automobiles, sales were in line with expectations, up 0.2%, after a revised increase of 0.9% for the month of March. Excluding automobiles and gasoline, sales nevertheless fell by 0.1% in April, compared to the previous month, against +0.1% consensus and +0.7% for the revised reading for March.
The Fed is expected to cut rates twice this year, starting in September, according to the majority of economists polled by Reuters, who at the same time significantly raised their inflation forecasts for the second consecutive month. According to the study, nearly two-thirds of the economists surveyed, or 70 out of 108, predict a first reduction in the federal funds rate in September, to a range of 5 to 5.25%. These results come from a survey conducted from May 7 to 13. In the previous survey last month, just over half of economists expected easing in September.
Neel Kashkari, head of the Minneapolis Fed, as well as Governor Michelle Bowman and Vice President for Supervision Michael Barr, also spoke yesterday. Kashkari assured yesterday that the Fed would do what was necessary to bring inflation back to target, but also indicated that it was not certain that the policy would be restrictive. According to him, the Fed must keep rates at current levels for a while longer. He also considered that Bitcoin had little practical interest and was neither an investment vehicle nor a currency… Bowman did not comment on monetary policy.
According to the CME Group’s FedWatch tool, the probability of a new monetary status quo from the Fed on June 12, following the next FOMC meeting, stands at 91.5%. The ‘probability’ that rates will still remain in their current range of 5.25 to 5.50% on July 31 after the next meeting is almost 67%. The first monetary easing could take place on September 18, according to this same tool.
This Thursday, the day is still busy. Housing starts in the United States for the month of April stood at a rate of 1.36 million units, compared to 1.44 million consensus and 1.29 million a month before. Building permits for the month of April stood at 1.44 million, compared to 1.49 million consensus and 1.48 million a month earlier.
The Philadelphia Fed’s manufacturing index for May came in at +4.5 versus the FactSet consensus of +6.8, signaling weak expansion in manufacturing activity in the region. A month before, the indicator was +15.5.
Weekly unemployment claims for the week ended May 11 were 222,000, compared to 218,000 consensus and 232,000 a week earlier.
Import prices for the month of April increased by 0.9% compared to the previous month, against +0.3% consensus and +0.6% for the revised reading – up – from the previous month.
Industrial production figures will be announced at 3:15 p.m. by the Fed. Patrick Harker, Michael Barr, Loretta Mester and Raphael Bostic from the Fed will speak during the day.
Finally, on Friday, the Conference Board Leading Indicator Index will be followed at 4 p.m.
In Wall Street business news, Cisco published last night. Walmart, Deere, Baidu and JD.com reported this Thursday before market, while Applied Materials, Copart and Take-Two Interactive will reveal their accounts after the close.
Values
Cisco gains 2% before market on Wall Street. The network equipment giant posted revenues of $12.7 billion in the third fiscal quarter just ended, certainly down 13% compared to last year, but higher than the consensus which stood at $12.5 billion. . Splunk and its cybersecurity businesses generated $413 million in revenue during the period. Quarterly adjusted earnings per share were 88 cents, compared to the consensus estimate of 82 cents. For the fourth fiscal quarter just started, Cisco expects revenues ranging from $13.4 billion to $13.6 billion, compared to a consensus of $13.2 billion. The situation therefore seems to be improving for the Californian group, while some clients are adjusting their spending upwards in order to take advantage of the AI market. “Customers are consuming equipment shipped over the past few quarters in line with our expectations and we are seeing a stabilization of demand as a result. The addition of Splunk to our product line will be a catalyst for future growth,” said CFO Scott Herren…
Walmart is now growing by more than 6% before market trading on Wall Street. The American retail giant posted adjusted earnings per share of 60 cents for the first fiscal quarter, compared to a consensus of 53 cents. Revenues totaled $161.5 billion over the period, an increase of 6% year-on-year, while the consensus was at $159.6 billion. Like-for-like growth in the American market, excluding gasoline, was 3.9% versus 3.4% consensus, with a performance of 3.8% for the Walmart brand and an expansion of 4.4% for Sam’s. Club. For its second quarter, the retailer expects adjusted earnings per share in a range of 62 to 65 cents, compared to a market consensus of 64 cents.
Deere, the American agricultural machinery giant, fell 6% before the market on Wall Street. The group exceeded profit expectations for the closed quarter, but at the same time lowered its forecasts in a context of reduced demand. The group now expects sales of large agricultural equipment to decline by 20 to 25% this year, whereas it previously anticipated a decline of around 20%. Net profit for fiscal year 2024 is now expected at around $7 billion, while the group previously forecast a range of $7.50 billion to $7.75 billion. For its second fiscal quarter ended at the end of April, the group achieved a net profit of 2.37 billion or $8.53 per share, compared to 2.86 billion a year earlier. Global sales fell 12% to $15.24 billion.
JD.com, the Chinese online commerce giant, listed on Wall Street, posted 7% growth in its business in the first fiscal quarter to 260 billion yuan, approximately $36 billion, a more than resilient performance. despite intense sectoral competition and the Chinese slowdown. In this quarter ended at the end of March, the group posted a net profit attributable to ordinary shareholders of 7.1 billion yuan – approximately 1 billion dollars -, compared to 6.3 billion yuan a year before. Non-GAAP profit was 8.9 billion yuan compared to 7.6 billion a year earlier. ADS-adjusted profit was 5.65 yuan or 78 cents per share. The consensus was for 63 cents in adjusted EPS per share and $35.6 billion in revenue.
Baidu, the Chinese Internet giant, published revenues of 31.5 billion yuan for its first fiscal quarter of 2024, an increase of 1% compared to last year but down 10% sequentially. Adjusted net profit rose 22% year-on-year to 7 billion yuan, but fell 10% quarter-on-quarter. Adjusted earnings per share were 19.91 yuan, or about $2.76, up 24%. In AI and cloud, the PaddlePaddle developer community grew to 13 million by mid-April 2024. Baidu expanded the Ernie model family by launching several lightweight LLM models in the first quarter of 2024, making Ernie more and more affordable. The group also launched and improved the tools of its MaaS platform for business customers in the first quarter of 2024.
Chubb jumped more than 8% before market on Wall Street. Berkshire Hathaway, the investment firm of the Oracle of Omaha Warren Buffett, had kept a major investment secret for months. Berkshire revealed the name of the lucky winner last night. This is the insurer Chubb. The firm’s stake in the capital of the insurer listed on Wall Street amounts to $6.7 billion. The position was revealed as part of a statement yesterday reflecting Berkshire’s positions at the end of the first quarter. In fact, Buffett’s conglomerate built its position for months, since 2023, but agreed with the American market authority, the Securities & Exchange Commission, to keep its investment confidential.
Chubb shares, already close to their historic highs, should experience a significant additional rise today following this revelation of Berkshire’s investment. Chubb is one of the largest property and casualty insurers in the United States and operates in 54 countries around the world, Bloomberg reports. The group’s chief executive, Evan Greenberg, is the son of Maurice Hank Greenberg who headed AIG for years. Evan Greenberg created Chubb through the 2016 merger of Ace and Chubb Corp, the agency added.
