The American market continues its march forward, resolutely anchored in positive territory. The S&P 500 is firmly up +1.02% at 5,633 pts, while a new all-time high of 5,635.39 pts was reached in recent trading. The index is in its 7th consecutive session of increase. The Nasdaq is close to new highs, with yet another session record at 18,655.19 pts. At the close, the technology index climbed +1.18% to 18,647 pts, with the support of stocks linked to artificial intelligence. The Dow Jones gained +1.09% to 39,721 pts.
Traders were reassured by comments from Jerome Powell, who estimated that the US economy would no longer be overheating, which would pave the way for rate cuts. During his testimony before the House Financial Affairs Committee, the Fed chairman estimated that the US economy would be heading for a soft landing, which would see the Fed’s inflation target being met without a rise in the unemployment rate. However, Jerome Powell does not envisage further interest rate cuts until he has seen more progress towards the central bank’s 2% inflation target.
Despite this soft landing scenario for the economy, the fight against inflation is not over… “A path to return to price stability while keeping unemployment low exists,” said Jerome Powell. “We are moving forward on this path and we are determined to stay on it.”
However, the Fed intends to free itself from any considerations guided by a possible electoral calendar timing. “Our job is to make decisions when and how they need to be made, based on the data, the evolution of the outlook and the balance of risks, and not by taking into account other factors, including political factors,” Jerome Powell told the House Financial Affairs Committee: “We have a long tradition of doing this, including in election years. Our decisions will be well-founded. It is simply not appropriate for us to think about electoral cycles.”
Jerome Powell has again said the Fed should cut interest rates again before inflation hits 2%, but after underlying dynamics seem likely to lead to it.
The publication of CPI inflation data for June on Thursday will therefore be closely watched as it could directly provide answers to Jerome Powell and guide the decisions of the American Central Bank.
Rate swaps continue to reflect two rate cuts in 2024. On the bond market, the US 10-year is recovering slightly to 4.291% while the 2-year is barely falling to 4.626%.
While black gold had entered a 4th consecutive session of decline, the market suddenly relaxed following the announcement of American oil reserves. These show a clear drop in crude reserves last week. The barrel of WTI crude therefore recovered by +0.76% to $82.44.
The dollar is relatively stable against the euro, trading at 0.923 euros.
Gold rose by +0.53% to $2,371 per ounce.
Values
Tomorrow’s session will mark the start of second-quarter earnings releases on Wall Street across the Atlantic, with JPMorgan Chase, Citigroup and Wells Fargo’s results being announced on Friday. In the meantime, a few files stand out during the session…
* Manchester United (+5.58% to $16.83). The club from the north of England saw its results deteriorate in the quarter ending at the end of March with an adjusted EBITDA of 13.7 million pounds (-65.5%) for revenues of 136.7 million pounds (-19.6%). The operating loss widened to 66.2 million pounds while the net loss increased from 5.6 million pounds to 71.4 million pounds over one year. For the full year 2024, ending at the end of June, the Company now expects annual revenues of approximately a record 660 million pounds, in line with the previous forecast range of 635 to 665 million pounds, with an adjusted EBITDA for 2024 of approximately 140 million pounds, in line with the forecast range of 125 to 150 million pounds. ManU won the FA Cup final on 25 May and finished the 2023/24 season in eighth position. For the 2024/25 season, the club thus qualified for the UEFA Europa League.
* Goodyear Tire & Rubber (+4.81% to $11.11). Yokohama Rubber is in advanced talks to buy the U.S. group’s off-road tire business for at least $1 billion, Bloomberg News reported. The Japanese company emerged as the most likely buyer after other suitors pulled out, the sources said. OTR tires are used in industries including mining. Akron, Ohio-based Goodyear said in November it was looking for alternatives for its chemicals business, its Dunlop brand and its OTR unit, with the aim of raising at least $2 billion.
* Blackstone (+2.46% to $124.26). Spanish gas network operator Enagas will sell its 30% stake in U.S. pipeline company Tallgrass Energy to Blackstone Infrastructure Partners for $1.1 billion. The deal is expected to close in late July. Tallgrass operates pipelines, storage facilities and terminals throughout the U.S. Midwest, transporting up to 10.3 billion cubic feet of natural gas and 700,000 barrels of oil per day.
* 3M (+2.03% to $101.72). Chief Financial Officer and President Monish Patolawala will leave the industrial group on July 31 to pursue other interests. 3M has initiated a succession process and will notify the market if necessary. The departure comes about two months after the company named a new CEO, as on May 1, Bill Brown succeeded Mike Roman, who became executive chairman after serving as CEO for the past six years.
* Microsoft (+1.46% to $466.25). The operating systems specialist has given up its observer seat on the board of directors of OpenAI, which had attracted the attention of regulators on both sides of the Atlantic, with the tech giant believing that its presence has been made obsolete by the significant improvement in the governance of the artificial intelligence (AI) company. The American group held a non-voting seat on the board of directors of OpenAI last November, when Sam Altman resumed his role as CEO at the head of the start-up that created the ChatGPT software. The seat allowed Microsoft to attend OpenAI board meetings and access confidential information. The merger between the two groups, which also resulted in an investment of more than $10 billion by Microsoft, had raised concerns from competition authorities in Europe, Great Britain and the United States. Microsoft cited new partnerships, innovation and customer growth since Altman’s return as reasons for leaving the headquarters.
* Chipotle Mexican Grill (+1.43% to $58.3). The group announced that Jack Hartung will step down as CFO on March 31, 2025 and will be replaced by Adam Rymer, who has been with Chipotle for 15 years and most recently served as vice president of finance.
* Oracle (0.99% to $142.07). Elon Musk’s artificial intelligence startup xAI and the cloud-integrated solutions giant have ended talks on a potential $10 billion server deal, The Information reported. The two companies had hoped to expand an existing agreement in which xAI leased Nvidia’s AI chips from the cloud computing vendor, the report said, citing several people involved in the discussions. xAI is building a system that uses Nvidia’s H100 graphics processors “for faster execution time,” the billionaire said in a post on his X platform. The specific capability Oracle was discussing with xAI has been outsourced to another customer, a source familiar with the matter told Reuters. “The company is still in discussions with customers about future capabilities and continues to engage with xAI on its infrastructure needs,” the source said. A multi-year deal to lease Nvidia processors from Oracle for a supercomputer project was in the works, but negotiations were hampered by issues including Musk’s demands to build a supercomputer faster than Oracle thought possible, the trade publication said. Oracle also expressed concern that xAI’s preferred location lacked sufficient power, the report added.
* Tesla (+0.35% to $263). Elon Musk’s company will pass a price increase of around 1,500 euros for its Model 3 in European countries, including Germany, the Netherlands and Spain. This decision comes after Brussels imposed additional customs duties on electric vehicles manufactured in China. Tesla, which manufactures its Model 3 in Shanghai and is the largest exporter of electric vehicles from China. These customs duties are provisional before a final decision by the Commission expected in November. They could reach 37.6% according to the carmaker.