Wall Street appears uncertain this Friday, still digesting the poor inflation figures (consumer and producer prices) announced this week across the Atlantic. The S&P 500 lost 0.30% to 5,135 pts, the Dow Jones 0.14% to 38,852 pts and the Nasdaq 0.53% to 16,042 pts. Nvidia, which stumbled by 3.2% yesterday, recovered a little today but remains volatile, pending the GTC 2024 conference. Operators are still closely monitoring this file from the giant AI chips, which had boosted the indices in recent years. month, but is struggling since the historic highs recorded during the session last Friday.
Bitcoin fell by 5% over 24 hours, back to the $68,000 zone today. On the Nymex, a barrel of WTI crude lost 0.4% to $80.9. An ounce of gold is little changed at $2,168. The dollar index stabilizes against a basket of currencies.
According to the government report from the day before in the United States, retail sales for the month of February 2024 showed an increase of 0.6% compared to the previous month, against +0.7% consensus. Excluding automobiles, they increased by 0.3% against the market consensus of 0.4%. Excluding automobiles and gasoline, on the other hand, sales increased by 0.3%, a little more than expected.
The producer price inflation figures were also an unpleasant surprise yesterday, since the producer price index increased by 0.6% in February, compared to the previous month, against 0.3% consensus and 0.3% a month before – an increase of 1.6% over one year in February against 1.1% consensus. Excluding food and energy, the producer price index increased by 0.3% compared to the previous month against 0.2% consensus. Over one year, the index excluding food and energy increased by 2%… This follows Tuesday’s announcement of an increase already greater than market expectations in consumer prices in February.
This Friday, for Four Witches Day, investors are following the New York Fed’s Empire State manufacturing index for the month of March 2024, which came in at -20.9, compared to a consensus of -8 and a reading from -2.4 a month ago. The index is therefore clearly sinking into the red, signaling a very strong contraction in manufacturing activity in the region considered this month.
The import price index in the USA for the month of February 2024 showed an increase of 0.3% compared to the previous month, compared to +0.2% of market consensus. Compared to last year, this index fell by 0.8%. The export price indicator for the month of February increased by 0.8% from one month to the next, against 0.1% consensus. Over one year, it declined by 1.8%.
American industrial production for the month of February 2024 showed a slight increase of 0.1% compared to the previous month, against a consensus close to stability and after a revised decline of 0.5% for the month of January. Manufacturing production increased by 0.9% from one month to the next, against a consensus here which is still practically stable, and after a revised decline to 1.1% for the month of January. The production capacity utilization rate stood at 78.3% compared to a consensus of 78.4%.
The preliminary index of American consumer sentiment from the University of Michigan for the month of March 2024 stood at 76.5, compared to the market consensus of 77.4 and 76.9 a month earlier. The indicator of one-year inflation expectations linked to this index stood at 3%, in line with the market consensus.
According to the FedWatch tool, the probability that the Fed will leave its rates unchanged at the highest in more than 20 years on March 20, between 5.25 and 5.50%, on the occasion of its next monetary meeting, is at 99%. The probability of an additional status quo on May 1, at the next meeting, reaches almost 95%. The probability of a first rate cut on June 12 remains significant, but the ‘probability’ of status quo in June rises to almost 42%…
Fed officials did not comment this week, due to the ‘quiet period’ preceding the March 20 monetary meeting. However, Janet Yellen, American Secretary of the Treasury, who is not bound by this obligation, made some comments the day before yesterday dismissing the idea of a stagflation scenario and envisioning a gradual decline in American inflation.
In corporate news on Wall Street, Adobe and Ulta Beauty announced their quarterly accounts yesterday, after the close. Jabil finally published this Friday.
Values
Adobe (-13%), the American software group known for its Acrobat, Photoshop, Flash and InDesign products, is losing ground on Wall Street. Operators are especially punishing forecasts that are too short for the second fiscal quarter, while for the first, results exceeded expectations. For the first fiscal quarter of 2024, Adobe posted adjusted earnings per share of $4.48 compared to a consensus of $4.38. Revenues totaled $5.18 billion over the period, up 11% year-on-year, compared to $5.14 billion consensus. This is a record level of revenue. The digital media unit posted sales of 3.82 billion, expanding 12%. The division including marketing and analytics software grew by 10%, with a turnover of 1.29 billion.
For the second quarter, the group anticipates revenues ranging from 5.25 to 5.3 billion dollars, compared to a consensus of 5.31 billion. The group anticipates $440 million in new recurring revenue in the ‘creative’ segment, a level below expectations which shows a less significant impact than expected from the new AI functionalities. Adjusted earnings per share for the quarter are expected between $4.35 and $4.40, compared to a consensus of $4.38.
Adobe also announced a rather generous share buyback program of $25 billion, while a previous $15 billion program expired at the end of the 2024 financial year.
Ulta Beauty corrects by 5% on Wall Street. The specialist in the distribution of beauty products posted revenues of $3.55 billion for the closed quarter, an increase of 10.2% compared to last year and approximately 1% higher than consensus. Adjusted earnings per share were $8.08, compared to $6.68 a year earlier and $7.5 consensus. Like-for-like sales increased 2.5% in the fourth quarter and 5.7% for the full year. Ulta nevertheless displays annual financial forecasts considered too short, with the growth of costs. The group is now planning an annual operating margin ranging from 14% to 14.3%, compared to 15% in 2023. Revenues are expected between 11.7 and 11.8 billion. Diluted earnings per share are anticipated between $26.2 and $27. A new $2 billion share buyback authorization was announced.
Jabil (-14%), the American electronics production subcontractor, announced for its second fiscal quarter 2024 revenues of $6.8 billion, adjusted operating profit of $338 million and adjusted earnings per share of $1.68. The consensus was for $1.66 in adjusted quarterly earnings per share on $6.89 billion in revenue. For its third fiscal quarter 2024, Jabil anticipates revenues ranging from $6.2 billion to $6.8 billion, adjusted operating income between $325 million and $385 million, and adjusted earnings per share ranging from $1.65 million to $2 billion. $.05. The consensus for this period was $2.12 adjusted EPS and $7.37 billion in revenue.
United Airlines (+1%) is reportedly on the verge of acquiring at least three dozen Airbus A321neo aircraft from aircraft lessors. The American company has been seeking for several weeks to fill the gap created by delayed orders for the Boeing 737 MAX 10. According to ‘Bloomberg’ sources, the carrier is in final negotiations for planes to be delivered between 2025 and 2027. The agency first reported in January that Airbus was looking for A321 production slots that it could offer to United. Delays in certification of the 737 Max 10 have jeopardized growth plans for United, which was expected to be the first major customer of the larger 737 variant.
Fisker (+8%), the small American manufacturer of electric cars, fell 51.9% last night at the close on Wall Street on rumors of bankruptcy. The group has reportedly hired financial advisors and lawyers to prepare for a potential bankruptcy filing, according to the Wall Street Journal, citing sources close to the matter… A new twist, however, supports the value today on Wall Street. According to Bloomberg, the startup could indeed enter into a partnership with a large manufacturer. The group spoke of “strategic discussions”, reacting to the Wall Street Journal article. Fisker said he doesn’t usually comment on market rumors, although he added that he often works with outside advisors. The group says it is focused on raising additional capital and therefore intends to enter into a partnership with “a major manufacturer”…
McDonald’s (-1%). In Japan, Australia, France… While McDonald’s was the victim of a large outage this Friday around the world, many restaurants were forced to interrupt taking orders from customers in person and by telephone due to the system disruption, a spokesperson for McDonald’s Holdings Company Japan said. The popular fast food chain said an IT outage disrupted operations at many of its outlets around the world, including in Japan, China, the United Kingdom, Australia and France, all excluding the possibility of a cybersecurity incident.
Nvidia (+2%), the American graphics and AI chip giant, whose products technology companies around the world now covet, will kick off its annual GTC conference on Monday. Jensen Huang, its CEO, will hold a two-hour speech at the SAP Center in San Jose, California. In previous years, Nvidia has used the show to announce some of its biggest products. This year, Nvidia is expected to launch its latest architecture and graphics processing chip. The new architecture, ‘Blackwell’, and B100 GPU, are expected to deliver much better performance when it comes to running AI models than the company’s current high-end H100 and H200 cards…
