Wall Street continues its momentum from the day before before trading this Friday, with the Nasdaq gaining another 0.8%, the S&P 500 0.5% and the Dow Jones 0.6%. The American market benefited yesterday from a sharp rise in the Nasdaq, in the wake of Apple, Nvidia, and the entire ‘chip’ segment. The trend is therefore confirmed for the time being. On the Nymex, a barrel of WTI crude fell 0.1% to $73.9. An ounce of gold rose 0.8% to $2,039. The dollar index lost 0.2% against a basket of currencies.
The blackout period preceding the Fed’s monetary meeting on January 30 and 31 begins this evening. During these few days, officials of the American central bank will no longer have to speak. Mary Daly, president of the San Francisco Fed, will still deliver two speeches in the afternoon and evening today. Chicago Fed President Austan Goolsbee will also be one to watch. Michael Barr, vice president of the Fed for supervision, will also have his say today before the start of the period of silence which runs from January 20 to February 1 – a period which obviously does not include the press conference of Jerome Powell from January 31.
Atlanta Fed President Raphael Bostic yesterday urged monetary policymakers to proceed with caution given the potential impacts of unpredictable events, from elections to global conflicts. The head of the Philadelphia Fed, Patrick Harker, declared that he expected inflation to continue to fall towards the 2% objective. He judges that the first rate cut should take place in the third quarter, to ensure that inflation returns to where it should be.
Regarding rate expectations, the CME Group’s FedWatch tool now shows a 97% probability that the Fed will opt for a status quo on January 31 at its next meeting. The probability of a quarter-point rate cut on March 20, following the next meeting, is around 52%. It has declined somewhat following the latest statistics. The tool shows a 37% probability that rates will end the year between 3.75 and 4%, and a 31% ‘probability’ that they will end between 4 and 4.25%.
In economic news across the Atlantic this Friday, operators will also follow at 4 p.m. the figures for resales of existing homes in the United States for the month of December (FactSet consensus 3.82 million units – stability compared to the month), as well as the preliminary University of Michigan Consumer Sentiment Index for January (same time, consensus 69.5).
In corporate news, PPG Industries and JB Hunt announced their quarterly results on Wall Street last night, while Schlumberger, The Travelers Companies, State Street, Fifth Third Bancorp, Huntington Bancshares, Regions Financial, Ally Financial and Comerica report this Friday .
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Apple. Pre-orders for Apple’s Vision Pro headset begin this Friday in the United States, for the modest sum of $3,499. The product is therefore put on sale on the Apple group’s website and its mobile application, while deliveries to stores and consumers will begin on February 2. Bloomberg notes that “the purchasing process will be unique,” since customers will have to use a recent iPhone or iPad “to scan their head and, if necessary, provide a visual prescription.” The agency recalls that the Cupertino group does not usually comment on the commercial performance of new products, but adds that the pre-order process could provide some indications. So if buyers are offered delivery times well beyond February 2, this may suggest that demand is strong – or that supplies are limited.
According to Bloomberg, Wall Street specialists predict a slow start for the device. Bank of America, which has just purchased Apple stock, still mentioned Vision Pro and generative AI as potential catalysts.
Meta, ex-Facebook, is spending billions of dollars on Nvidia chips, according to CNBC, which quotes an Instagram Reels publication in which Meta CEO Mark Zuckerberg said the company would have… 350,000 cards Nvidia H100 graphics by the end of the year, although it doesn’t say how many Meta has already purchased. CNBC reports that at the low end of the estimated price range for the H100 chips, Meta would end up spending $9 billion on GPUs, which are key to Meta’s research in generative artificial intelligence.
Zuckerberg also clarified his intention to bring the AI research team closer to that of business-oriented generative AI. The development of infrastructure to meet demand would therefore be very rapid. Taking into account Nvidia chips and equivalent products from other suppliers, the group could have 600,000 GPUs at the end of the year! Meta had previously indicated a few weeks ago that it might also buy competing AMD chips. In addition, Zuckerberg’s group is reportedly working on the design of a GPU itself. Finally, Meta would form a new version of the Llama model of language.
iRobot is collapsing on Wall Street, while according to the Wall Street Journal, citing people familiar with the matter, the European regulator has decided to block the takeover of the designer of the Roomba robot vacuum cleaner. Amazon had offered $1.4 billion to get its hands on iRobot. Initial plans for this operation were revealed in August 2022, as the e-commerce giant sought to strengthen its portfolio of smart devices. The European Commission, European competition watchdog, has until February 14 to approve or not the transaction, but the matter seems compromised according to the WSJ, which indicates that Amazon was informed yesterday during its meeting with those responsible for the Commission that the agreement was likely to be rejected. The e-commerce giant would not have proposed any solution before the January 10 deadline to respond to the regulator’s concerns that the agreement could restrict competition in the robot vacuum cleaner market…
Amazon. AWS (Amazon Web Services) will invest 2.26 trillion yen or around $15 billion in Japan by 2027 to expand its cloud computing infrastructure to support artificial intelligence services, reports Reuters. The Amazon unit will invest in expanding its facilities in metropolitan Tokyo and Osaka to meet growing customer demand, said the group, which had already invested 1.51 trillion yen between 2011 and 2022 to expand its cloud capacity in Japan. AWS also indicated that it provides generative AI services to large customers in Japan, including Nomura and Asahi.
PPG Industries, an American chemical group specializing in construction materials, paints and industrial coatings, published adjusted earnings per share of $1.53 for its fourth quarter, compared to a consensus of $1.50 and a level of 1. .22$ a year earlier. Revenue was $4.35 billion, beating consensus by 2% from $4.19 billion a year earlier. PPG expects 2024 adjusted earnings per share ranging from $8.34 to $8.59, compared to a market consensus of $7.7. Adjusted net income for the quarter ended rose 27% to $363 million.
JB Hunt, the American freight transport giant, announced earnings per share of $1.47 for its fourth fiscal quarter, compared to $1.92 a year earlier. Revenues totaled $3.30 billion, down 9.5% year-over-year, compared to the consensus of $3.24 billion. Quarterly operating profit fell 28% to 203 million. The group misses the margin and earnings per share consensus. For the year, revenue totaled $12.83 billion, down 13%, while diluted earnings per share stumbled 24% to $6.97.
Macy’s, an American department store chain, has indicated its intention to cut 2,350 jobs and close five of its stores, according to the Wall Street Journal. The job cuts represent 3.5% of the group’s workforce, while the retailer continues to adapt to the development of online commerce. However, spending aimed at improving the customer experience should be increased. The group will also strengthen automation.
Schlumberger, the oil services colossus, climbs on Wall Street following its quarterly publication. Fourth-quarter revenues totaled nearly $9 billion, up 8% from the previous quarter and 14% from last year. Adjusted earnings per share were 86 cents, up 10% sequentially and up 21% from a year ago. The consensus was for 84 cents in quarterly adjusted earnings per share on $8.96 billion in revenue. The group also reported quarterly generation of operating cash flow of $3.02 billion and free cash flow of $2.28 billion. The board of directors approved a 10% increase in the quarterly dividend to $0.275 per share.
For the closed financial year, Schlumberger therefore posted revenues of $33.1 billion, an increase of 18%, for adjusted earnings per share of $2.98, an increase of 37%. The group’s annual net profit increased by 22% to $4.2 billion. “In 2024, we will experience another year of strong growth driven by international markets,” indicates management, which therefore anticipates further growth driven by production systems, reinforced by the additional subsea opportunities of the OneSubsea joint venture.
The Travelers Companies, the American group active in insurance, climbed 6% before market on Wall Street, having just published a fourth quarter which it describes as excellent. Quarterly net profit was indeed a record $6.99 per share on a diluted basis, while adjusted earnings per share also reached a record at $7.01. Annual net income was $2.99 billion, or $3.07 billion on an adjusted basis. For the closed quarter, this net profit stood at $1.63 billion in consolidated data and on an adjusted basis. The group also mentions an “exceptional” consolidated combined ratio, up 8.7 percentage points to 85.8%.
Fifth Third Bancorp, the American banking establishment, published diluted earnings per share of 72 cents for its fourth fiscal quarter, compared to $1.01 a year earlier. Net interest income declined to 1.42 billion from 1.58 billion a year earlier. Net profit attributable to common shareholders fell 30% year-on-year to $492 million. The average level of deposits increased by 2% compared to the previous quarter and by 5% compared to last year. The group also warns of an expected drop in net interest income in 2024.
State Street is making progress on Wall Street, while the American financial institution published for its fourth fiscal quarter earnings per share of $2.04 excluding items and revenues of $3.04 billion, up 13% sequentially. but down 4% compared to last year. The consensus adjusted earnings per share was $1.83. Revenues also beat the consensus, which was 2.95 billion.
