Wall Street appears almost stable at the start of the session this Thursday, catching its breath following the new record for the S&P 500 and after a slight upward revision of the American GDP figures for the fourth quarter. The S&P 500 gained 0.08% to 5,253 pts, while the Dow Jones lost 0.01% to 39,755 pts. The Nasdaq takes 0.05% to 16,406 pts. Caution prevails before a long weekend – Wall Street being closed tomorrow – and on the eve of new inflation figures. On the Nymex, a barrel of WTI crude gained 1.2% to $82.3. An ounce of gold rose 1% to $2,234. The dollar index advances 0.1% against a basket of currencies.
The final US GDP for the fourth quarter of 2023 increased at a rate of 3.4%, while the market consensus was 3.3% according to FactSet and the previous assessment at 3.2%. The price index linked to GDP increased at a rate of 1.6%, as expected. Personal consumption expenditure increased at a rate of 3.3%, above the expectations of local economists.
Weekly unemployment claims for the week ending March 23, which have also just been announced, stood at 210,000 compared to the FactSet consensus of 215,000 and 212,000 a week before.
The Chicago Regional Manufacturing PMI for March 2024 came in at 41.4, compared to a FactSet consensus of 46 and a reading of 44 a month earlier. Thus, the indicator signals an acceleration in the contraction of manufacturing activity in the region considered.
The final University of Michigan U.S. Consumer Sentiment Index for March 2024 came in at 79.4, compared to a FactSet consensus of 76.7 and a preliminary reading of 76.5. The index presenting inflation expectations for the coming year came out at 2.9%, in line with economists’ expectations.
The American National Association of Realtors’ housing sales promise index for the month of February 2024 showed growth of 1.6% month-on-month, an increase greater than the consensus. The decline for the month of January was revised to -4.7%, compared to -4.9% previously estimated.
Fed Governor Christopher Waller signaled last night that he was in no rush to cut rates, following the latest higher-than-expected US inflation figures. During a speech in New York, Waller therefore displayed a rather cautious posture, specifying that the latest data indicated to him that it was prudent to maintain rates (between 5.25 and 5.50%) at the level current restrictive regime perhaps longer than previously envisaged, in order to bring inflation back to the sustainable trajectory of 2%. Waller still expects a rate cut this year, but does not intend to adjust monetary policy until he sees further evidence that inflation will continue to fall.
Waller said analysis of three- and six-month measures of the consumer price index, excluding food and energy prices, shows that progress on inflation has slowed and could have stopped. The Fed governor says he will have to wait at least a few months of better inflation numbers before he has enough confidence that starting to cut rates will keep the economy on track for inflation of 2%. “The risk of waiting a little longer to cut rates is significantly lower than the risk of acting too soon,” Waller said last night. “Cutting rates too soon and risking a lasting rebound in inflation is something I want to avoid.” Waller will notably monitor the February personal consumption expenditures (PCE) price index this Friday, with “core” PCE inflation, the Fed’s preferred measure, expected to show slight monthly price increases compared to the month. previous. Waller is considering a reduction in the total number of rate cuts this year or a delay if things don’t improve.
Tomorrow, investors will monitor the inflation index (+2.8% FactSet consensus on the adjusted index year-on-year) as part of the publication of the report on household income and spending. The balance of international trade in goods will also be revealed. Jerome Powell will also liven up the day… Wall Street will nevertheless be closed on Friday for Good Friday – but then open for Easter Monday.
While the S&P 500 has gained around 10% this year, some strategists, such as those at JP Morgan and Morgan Stanley, are more cautious and believe that high valuations will be difficult to justify if they are not accompanied by a significant improvement in prices. business profits. The first quarter financial publication season will begin in a few days and will therefore be of major importance, while euphoria in the artificial intelligence segment and expectations of a rate cut have supported the markets for the time being.
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Take-Two Interactive Software (+1%), the American video game publisher, announced the acquisition of Gearbox Entertainment, best known for its first-person shooter Borderlands, from the Swedish group Embracer for 460 million dollars. The Swedish group is selling the game developer at what may seem a low price, after buying it in a deal that valued Gearbox up to $1.4 billion in 2021. Franchise owner Embracer video game company Tomb Raider, intends to reduce its net debt by around 3.2 billion crowns. Since last year, the group has been carrying out a restructuring program aimed at reducing its debt. Gearbox will operate as a studio within 2K, a publishing label of Take-Two, and will be led by founder and CEO Randy Pitchford. The acquisition is expected to be completed during Take-Two Interactive’s first quarter of fiscal 2025.
Walgreens Boots Alliance (+1%), the American pharmacy chain, exceeded market expectations for its second fiscal quarter 2024 and tightened its financial forecasts. The Deerfield, Illinois, group posted adjusted earnings per share of $1.20 (+3.4%) for the quarter ended, compared to a consensus of 82 cents. The chain recently cut staff and expenses, closing some unprofitable locations. Second-quarter sales rose 6.3% year-over-year to $37.1 billion, compared to the $35.9 billion consensus. Growth at constant currencies reached 5.7%. The group now expects 2024 adjusted earnings per share ranging from $3.20 to $3.35, reflecting a difficult retail environment in the United States.
Home Depot (-1%) announced its intention to buy Texas construction materials supplier SRS Distribution in a deal worth $18.25 billion. The group is thus strengthening its activities aimed at professionals. SRS was owned by private equity firms. This is the largest acquisition in the history of the American home products distribution giant. Home Depot says that with this operation, its total addressable market now reaches $1,000 billion, an increase of $50 billion. SRS has a sales team of more than 2,500 people and more than 760 agencies in 47 states, with a fleet of several thousand trucks. Dan Tinker, CEO of SRS, will remain in post with his management team. The transaction is expected to be completed by the end of the 2024 financial year.
Apple (-1%) remains to be followed on Wall Street this Thursday, while according to a study by Counterpoint Research, deliveries of smartphones in the world could well increase by 3% this year with the slowdown in inflation, which would allow demand to recover, particularly in emerging markets. The integration of generative artificial intelligence would also be particularly positive for high-end segments like that of Apple… Among the other ‘Magnificent Seven’, Nvidia gains 1% and Microsoft remains unchanged…
