At the close, Wall Street markets are well oriented. The S&P 500 gains +0.62% to 5,509 pts. The Dow Jones gains +0.41% to 39,331 pts. The Nasdaq is firmer with a rebound of +0.84%, reaching 18,028 pts. The technology index is supported by Tesla, which is on fire for a 2nd consecutive session.
On Tuesday, S&P warned some major nations about their management. The agency said the United States, France and major economies were unlikely to halt their rising debt levels in the coming years. S&P Global estimated that for the United States, Italy and France, the primary balance would need to improve by more than 2% of combined GDP for their debt to stabilize. “This is unlikely to happen over the next three years,” S&P said. “We believe that only a sharp deterioration in borrowing conditions could persuade G7 governments to implement more resolute fiscal consolidation at this stage of their electoral cycle.”
At the macroeconomic level, U.S. job openings for May 2024 came in at 8.14 million, according to the Labor Department, compared with a FactSet consensus of 7.9 million and a revised reading of 7.92 million about a month earlier.
On the other hand, highly anticipated, Jerome Powell spoke on Tuesday at an ECB forum on monetary policy. The Fed chairman refused to answer a question on the possibility of easing monetary policy as early as September. He nevertheless indicated that we should not act too hastily, nor too late. According to Jerome Powell, “we are returning to the path of disinflation”, with recent encouraging data, but more elements would still be needed before reducing rates.
Powell also explained that inflation in services was more stubborn, linked to wages. He noted, however, that the labor market is easing and therefore presents less of a problem for inflation. Jerome Powell anticipates a return of inflation to the 2% target, perhaps by the end of next year or more likely in 2026.
Jerome Powell’s pessimistic forecasts about a possible hard landing have not come to fruition. He sees a gradual decline in demand in the labor market and a weakening of other markets such as housing. In any case, the labor market and growth remain strong, notes Powell, who points to the Fed’s dual mandate and indicates that it is not a question of acting too quickly or keeping rates too high for too long. The Fed is fully aware of the risks in both cases, which explains its constant search for the right balance.
At the same monetary policy forum in Sintra, Portugal, Christine Lagarde sounded a little more confident about inflation, but the ECB president stressed that monetary decisions would depend on the data, in order to ensure that the easing that had just begun could be continued…
Asked about the neutral rate and its possible evolution, Powell deflected the question, noting that many observers do not anticipate a return to a neutral rate as low as previously. According to the Fed chairman, no one really knows how things will evolve. He emphasized the need for gradual evolutions to achieve the dual mandate of the Fed. However, it is extremely difficult to predict a neutral rate in the long term, Powell suggests.
On the oil side, the barrel of WTI crude fell -0.34% to $83.05.
The dollar is fairly stable against the euro, trading at $0.9307.
Gold appreciates by +0.16% to $2,329 per ounce. Bitcoin is down -1.69% to $61,970.
Values
* Tesla (+10.2% to $231.26). After already gaining more than 6% yesterday, on speculation about a possible “robotaxi”, Elon Musk’s group is on fire again. The group has indeed exceeded expectations in terms of deliveries for the quarter ending in June. For the period, Tesla produced approximately 411,000 vehicles and delivered nearly 444,000. In addition, the group deployed 9.4 GWh of energy storage products in the second quarter, the highest quarterly deployment to date.
In detail, the Texan group produced 386,576 units of the Model 3 and Y in the closed quarter and delivered 422,405 units. The production of other models represents 24,255 units, while deliveries were 21,551. In total, Elon Musk’s group therefore produced 410,831 units and delivered 443,956. The consensus was around 438,000 units delivered according to Bloomberg. In any case, deliveries still fell by -4.8% compared to last year, a second quarter of decline with increased competition and pressure on prices, particularly in China. Deliveries are up +14.8% compared to the previous quarter… Tesla will publish its full quarterly financial results after closing, on July 23.
* Paramount (+7.81% to $19.32). Barry Diller is reportedly considering a bid to take control of Paramount, the New York Times reports. Mr. Diller, a pioneer of digital media, lost a bidding war for Paramount Pictures decades ago, the NYT reports. This time, he is reportedly going after its parent company National Amusements. The billionaire is reportedly considering a bid to take control of Paramount, the parent company of CBS, MTV and Nickelodeon. The NYT cites four people familiar with the matter. Diller’s digital media conglomerate, IAC, is said to have signed confidentiality agreements with National Amusements, Paramount’s majority shareholder. Diller’s interest in Paramount is a new twist in the matter.
Paramount had previously been close to reaching a deal in recent months with Skydance, a Hollywood studio, before negotiations abruptly collapsed.
* Apple (+1.62% to $220.27). The Cupertino group has reportedly increased its chip orders, suggesting increased demand for the iPhone 16, according to Apple Insider. The Apple brand has reportedly increased its chip orders from TSMC, which is reportedly placing iPhone 16 and iPhone 16 Pro models on the A18 chip. The introduction of Apple Intelligence at the recent WWDC developer conference may have helped boost demand for the iPhone 16, Apple Insider adds. The Cupertino group could change its chip strategy accordingly.
With the increase in orders in place with partner TSMC, Apple is reportedly preparing to sell between 90 million and 100 million units of the iPhone 16, claims Apple Insider, which is reporting from sources in Taiwan’s Commercial Times. Both the Pro and non-Pro models of the iPhone 16 would therefore use, for at least some, processors from the A18 family that would make the models capable of using Apple Intelligence.
* Polestar (-5.52% to $0.135). The Swedish electric vehicle designer announced that it would have to take measures to compensate for the heavy import duties from the EU and the United States on its electric cars manufactured in China. For its first quarter, the group also posted an operating loss. The group controlled by the Chinese company Geely, which currently designs all of its vehicles in China, will adapt to the customs tariffs by producing its new model, the Polestar 3, in the United States by the end of the summer. The Polestar 4 will then be produced in South Korea from the second quarter of 2025. For the quarter ended, the group deplored an operating loss of $232 million, while its revenues fell to $345 million ($543 million a year earlier).
