Wall Street continues to rise before market this Thursday, the S&P 500 gaining another 0.5%, the Dow Jones 0.3% and the Nasdaq almost 1%… Last night, the Nasdaq Composite had already agreed 1.25% and the Dow 1.03%, following the Fed’s announcements. The American central bank seemed to maintain its stance regarding further rate cuts this year, despite recent data that was a little less positive than expected regarding inflation. Jerome Powell, for his part, judged that despite recent statistics, the narrative relating to a gradual decline in inflation had not changed.
The Fed yesterday kept its interest rates unchanged between 5.25 and 5.50% on ‘fed funds’, the fifth consecutive monetary status quo. Yesterday’s announcements still call for three quarter-point rate cuts later this year. For now, rates remain at the highest since 2001. The Fed does not expect it will be appropriate to narrow the target range until it gains greater confidence in a sustainable return inflation towards 2%. Powell clarified during his press conference that the latest inflation figures had therefore not called into question the scenario of continued easing of prices in the United States. However, the central bank does not consider the battle won.
Nine FOMC officials who presented their forecasts on Wednesday estimate that the central bank will cut rates three times this year. Five officials judge that two reductions will be enough. One participant expects rates to fall by 100 basis points over the year. Two members of the FOMC, on the other hand, are considering a single rate cut, while the last two are counting… on a status quo all year.
The Fed considers inflation still high. Its new forecasts show that the consumer price index excluding food and energy is now expected to increase by 2.6% this year compared to 2.4% previously. Adjusted inflation should fall to 2.2% in 2025 and 2% in 2026… American growth this year is expected at 2.1%, compared to 1.4% forecast in December. This economic expansion is expected at 2% in 2025 and 2026. The unemployment rate should be at 4% at the end of the year according to the Fed, compared to 4.1% previously forecast in December and 3.9% in February. . The unemployment rate is forecast at 4.1% in 2025 and 4% in 2026.
On the economic front in the United States this Thursday, weekly US jobless claims for the week ended March 16 stood at 210,000, compared to a FactSet consensus of 214,500 and a revised reading of 212,000 for the previous week.
The Philadelphia Fed’s manufacturing index for March came in at +3.2, compared to a consensus of -3 measured by FactSet.
The current account deficit for the fourth quarter was 194.8 billion dollars against 205 billion consensus.
Operators are still waiting for the flash American composite PMI index for March (2:45 p.m., consensus 52.2 and 52 in services), resales of existing homes for February (3 p.m., consensus 3.93 million units) and the Conference Board Leading Indicator Index (same time, consensus -0.2%).
Accenture, Nike, FedEx, Lululemon, Darden Restaurants and FactSet also publish their quarterly accounts this Thursday. Micron, KB Home and Chewy announced last night.
Finally, on Friday, investors will follow interventions by Jerome Powell, Philip Jefferson and Raphael Bostic of the Fed.
Values
Micron, a semiconductor specialist whose products include dynamic memories, flash memories and semiconductor systems, is on fire before the market on Wall Street, at an all-time high, and supports the sector. For its second fiscal quarter, the group posted adjusted earnings per share of 42 cents, while analysts… expected a loss. Revenues were $5.82 billion (+58%) versus $5.35 billion consensus. The forecasts are even more solid, since Micron envisages revenues ranging from 6.4 to 6.8 billion dollars in the third fiscal quarter just started, against around 6 billion consensus. Adjusted third-quarter earnings are expected to be between 38 and 52 cents per share, compared to a consensus of 24 cents.
Unsurprisingly, the group’s outperformance comes from strong demand for hardware linked to artificial intelligence. “We believe that Micron is one of the biggest beneficiaries in the semiconductor industry of the multi-year opportunity offered by AI,” insisted the group’s chief executive, Sanjay Mehrotra. The executive notes that Micron returned to profitability a quarter earlier than expected, and is therefore very positive about the outlook. According to him, 2024 will mark a rebound for the industry and 2025 will see record sales levels.
Micron is banking on its ultra-fast memories powered by Nvidia chips to help data center operators develop AI software. AI-related systems use high-bandwidth memory ‘HBM’. Micron earned its first revenues from a form of this memory in the last quarter, notes Bloomberg. The group also indicates that its semiconductors are part of AI accelerators based on Nvidia graphics chips… The group anticipates several hundred million dollars in revenue from HBM products in 2024. Earlier this week, during At Nvidia’s GTC conference, its emblematic CEO Jensen Huang spoke of Micron as a leader in this new HBM technology deemed “vital” for AI systems.
Chewy hesitates before trading on Wall Street. The American distributor of pet products announced, for its fourth fiscal quarter, adjusted earnings per share of 18 cents compared to -4 cents of consensus. Net profit was 31.9 million, a net margin of 1.1%, expanding by 80 basis points. The adjusted Ebitda margin, however, contracted to 3.1%. Revenues totaled $2.83 billion (+4.2%), against a consensus of $2.77 billion. For the year ended, revenues totaled 11.15 billion (+10.2%), while adjusted EPS climbed to 69 cents. Revenue for the fiscal first quarter is expected to be between $2.84 billion and $2.86 billion, slightly below consensus.
KB Home, the American real estate developer, announced for its first fiscal quarter 2024 revenues up 6% to $1.47 billion, net profit up 10% to $139 million and diluted earnings per share up 21% to $1.76. Net orders increased significantly by 55%. Their value rose 58% to $1.58 billion. The group expects real estate revenues ranging from $6.50 to $6.90 billion for the 2024 financial year. Management cites a solid start to the year and an improvement in market conditions since the end of the 2023 financial year. The positive trend would also be confirmed at the start of the second fiscal quarter and the group says it is well placed to benefit from this environment. Over the quarter ended, unit deliveries increased by 9% to 3,037, while the average selling price fell to $480,100.
Accenture, a consulting giant listed on Wall Street, stumbles before the market. The IT services colossus has indeed lowered its revenue estimates for the 2024 financial year, in the face of an uncertain economy and reductions in client spending on consulting services. Thus, Accenture now only expects growth of 1 to 3% over the financial year, compared to 2 to 5% previously. For the third fiscal quarter, revenues are expected in a range of $16.25 to $16.85 billion, versus $17 billion consensus. For the second fiscal quarter, adjusted earnings per share of $2.77 still exceeded expectations, while revenues came in line at $15.8 billion.
Paramount. Private equity firm Apollo Global Management has reportedly offered $11 billion for Paramount Global’s Paramount Pictures film studio, according to a Reuters source with direct knowledge of the offer. The film studio is considered the crown jewel of the Paramount media conglomerate, Reuters says, noting that it has a library of films including classics such as ‘The Godfather’ and ‘Breakfast at Tiffany’s’, as well as blockbuster franchises like ‘Mission: Impossible’, ‘Star Trek’ or ‘Transformers’. This studio has attracted the interest of many suitors. Shari Redstone, majority shareholder of the conglomerate via National Amusements, is reluctant to part with the studio acquired by her father, the late Sumner Redstone, thirty years ago.
The Financial Times reports that Redstone would not be convinced by Apollo’s offer and was instead negotiating a deal with billionaire David Ellison. Skydance Media CEO Ellison is reportedly in talks to acquire National Amusements, the holding company of the Redstone family, to take control of Paramount Global.
Darden Restaurants corrects on Wall Street, on disappointing prospects. The group also published, for its third fiscal quarter, sales up 6.8% to $3 billion, for diluted EPS from continuing operations of $2.60. He authorized a new $1 billion stock buyback program. For the 2024 financial year, revenues are now expected to be around 11.4 billion, with like-for-like growth ranging from 1.5 to 2%. Adjusted diluted earnings per share from continuing operations are anticipated to be between $8.80 and $8.90.
Reddit. Reddit’s IPO was, as expected, priced at the high end of the range. 22 million shares were sold at $34 each by the group and its existing shareholders. The indicative range was between $31 and $34. The proceeds of the operation are $748 million and the initial valuation of the group is $6.4 billion. Excluding shares sold by existing shareholders, Reddit raised approximately $519 million in gross proceeds from the IPO. The operation is led by Morgan Stanley, Goldman Sachs, JP Morgan and Bank of America. Trading is scheduled to begin today on the New York Stock Exchange under the symbol RDDT.
