After its recent records, Wall Street took a breather this Thursday, the day after a day of break for Juneteenth. The S&P 500 lost 0.25% to 5,473 pts and the Nasdaq returned 0.79% to 17,721 pts, while the superstar Nvidia, star of AI, fell by 3.5% after reaching 3,400 billion dollars of stock market value. The Dow Jones rose 0.77% to 39,134 pts. On the Nymex, a barrel of WTI crude advanced 0.6% to $81.35. The dollar index advances 0.2% against a basket of currencies.
In today’s economic news, housing starts in the United States for the month of May 2024 stood at 1.277 million (-5.5%), compared to 1.39 million consensus and around 1.352 million a months earlier. Building permits numbered 1.386 million, compared to 1.45 million consensus and 1.44 million in April.
Weekly unemployment registrations for the week ending June 15 stood at 238,000, compared to a consensus of 235,000 and a revised level of 243,000 a week earlier.
The Philadelphia Fed manufacturing index for June was +1.3, compared to a FactSet consensus of +4.8 and a level of +4.5 a month before. The index therefore signals a very weak expansion of manufacturing activity in the region considered.
The current account balance for the first quarter showed a deficit of 237.6 billion dollars, against 206 billion consensus.
The Atlanta Fed’s inflation expectations index for June 2024 stood at +2.3%, in line with the reading for the previous month. The indicator measures one-year inflation expectations from the point of view of firms.
Kashkari, the head of the Minneapolis Fed, indicated that it would probably take “a year or two to bring American inflation back to the 2% target.” He added that wage growth was probably “still a little too high to return to 2% in the immediate future.” He explained that the US economy has proven remarkably resilient and that disinflation is nevertheless underway… Kashkari sees some signs of weakening in the economy, but remains optimistic about strong fundamentals.
Remember that the Fed last week maintained its key rate in the range of 5.25 to 5.50%, at a 23-year high, in order to maintain continued pressure on the economy and curb inflation. The bank released projections showing a median forecast of 19 U.S. central bankers calling for just one rate cut this year.
Finally, on Friday, for Four Witches Day, operators will monitor the US composite flash PMI index, existing home resales, as well as the Conference Board leading indicators index.
Values
Dell (-0.4%) and Super Micro (-0.2%) provide server racks for xAI’s supercomputer. Michael Dell, the founder of Dell, indicated on the social media network by Elon Musk. He also posted a photo of the famous factory on X. The supercomputer would be powered by 100,000 Nvidia H100 GPUs and will power xAI’s Grok AI system, entrepreneur Mario Nawfal adds on X. In response to a post from Nawfal, Musk added on X that Super Micro Computer was also participating in this ambitious supercomputer project in the city of Memphis, Tennessee.
Still in AI news, Ilya Sutskever, co-founder and former scientific director of OpenAI (ChatGPT), announced yesterday the launch of a new company dedicated to artificial intelligence, Safe Superintelligence. The startup intends to create a safe AI environment. It has offices in Palo Alto and Tel Aviv. “Our single-minded focus means there are no distractions from management overheads or product cycles, and our business model means safety, security and progress are all shielded from commercial pressures to short term”, asserted Ilya Sutskever on the social media network Sutskever left OpenAI in May.
Amazon (+1.8%), the American e-commerce giant intends to invest 10 billion euros, or nearly $11 billion, to manage growing demand for its cloud services and retail products in Germany . 8.8 billion euros would be committed by 2026 to expand Amazon Web Service’s cloud infrastructure, in response to the increased potential of AI in Europe. German Chancellor Olaf Scholz welcomed this investment by Amazon, which could generate more than 4,000 jobs from 2024. This brings the total investments planned by the American group in Germany to 17.8 billion euros.
AMD (+2.1%) estimates that the cyberattack suffered by the group should not have a significant impact on its operations. “Based on our investigation, we believe that a limited amount of information relating to the specifications used to assemble certain AMD products was accessed on a third-party vendor’s site,” a company spokesperson said, quoted by Bloomberg. “We do not believe this data breach will have a material impact on our business or operations,” added the second largest US manufacturer of PC processors. AMD launched an investigation this week after reports that an organization called Intelbroker had hacked its systems. Yesterday, the group said the intrusion failed to obtain critical information. Remember that AMD is also Nvidia’s main competitor in advanced AI accelerators.
Accenture (+7.2%), the consulting giant is climbing Wall Street. It is essentially the perspectives displayed, with the help of artificial intelligence, that support the value. The technology services provider now expects revenue growth of 1.5 to 2.5% for the financial year, compared to a consensus of 1.6%. Previous guidance ranged from 1 to 3%. For the closed quarter, adjusted earnings per share narrowly missed consensus, coming in at $3.13. Quarterly profit was $1.93 billion, on $16.47 billion in revenue. Sales are also lower than expected. The only good news therefore lies in the increased activity linked to generative AI. New orders exceeded $21 billion, compared to $17.3 billion a year earlier. Of this total, $900 million relates to “GenAI” services in the quarter, bringing the annual total to more than $2 billion.
KB Home (+2.8%), the American real estate developer published adjusted earnings per share of $2.15 for its second fiscal quarter, compared to a consensus of $1.8 and $1.94 a year earlier. Revenues totaled $1.71 billion, 3% better than expected, compared to $1.77 billion in the corresponding period a year ago. Annual real estate revenues are expected at $6.8 billion in the mid-range, up from $6.7 billion previously. Annual gross and operating margin estimates have also been revised slightly upwards. The backlog at the end of the quarter showed a decline of 14%. “We delivered strong results in our second quarter of 2024, with key metrics above the high end of our guidance ranges,” said Jeffrey Mezger, CEO.
Darden Restaurants (+1.5%), the American restaurant chain published revenues of $2.96 billion for its second quarter, in line with broker estimates, for earnings per share of $2.57. to him below expectations. The revenue guidance for the current financial year is at $11.85 billion in the middle of the range, which, again, misses the consensus. Growth would thus be close to 4%, compared to 8.7% a year earlier. For the quarter ended, like-for-like sales were stable while free cash flow fell by a third to $303 million.
Jabil (-11.4%). The electronics manufacturing subcontractor reported revenues of $6.8 billion, adjusted operating income of $350 million and adjusted earnings per share of $1.89 for its fiscal third quarter. The consensus was $1.85 in quarterly adjusted EPS for $6.53 billion in revenue. For the fourth fiscal quarter, revenues are expected between $6.3 and $6.9 billion, for adjusted earnings per share ranging from $2.03 to $2.43. The consensus is $2.22 adjusted EPS and $6.8 billion in revenue.
Kroger (-3.2%), the American mass distribution group announced for its first fiscal quarter like-for-like sales up 0.5% excluding gasoline, operating profit of $1.294 billion and earnings per share of $1.29. Adjusted earnings per share were $1.43. For the financial year, the group maintains its forecasts and envisages comparable revenues excluding gasoline increasing by 0.25 to 1.75%, for adjusted earnings per share ranging from $4.30 to $4.50 and free cash. adjusted flow housed between 2.5 and 2.7 billion dollars.
