Wall Street was very close to its peaks on Thursday, with the S&P 500 gaining another 0.04% to 4,783 pts, after having established a new record during the session, and the Nasdaq stagnating at 15,095 pts (-0.03%), against an increase of 0.14% in the Dow Jones to 37,710 pts. The American rating therefore once again demonstrated great firmness on the eve of the last session of the year after eight weeks of non-stop gains.
On the Nymex, a barrel of WTI crude lost 1.9% to $72. The dollar index lost 0.2%, to a five-month low against a basket of reference currencies. On the bond markets, the yield on the 2-year T-Bond is 4.26%, compared to 3.81% on the 10-year bond and 3.95% on the 30-year bond.
While business news remains limited, economic data was plentiful: Weekly unemployment claims in the United States for the week ended December 23 stood at 218,000, compared to the FactSet consensus of 209,000 and 206,000. a week earlier. These figures from the US Department of Labor therefore show a deterioration in the labor market, which reinforces the probability of a rate cut by the Fed at the start of next year…
The deficit in international trade in goods in the United States for the month of November was posted at $90.3 billion according to today’s report, while the Bloomberg consensus was at $89.6 billion. This advanced reading of the November deficit compares to a level of -$89.6 billion in October. Imports declined by 2.1% compared to the previous month and exports by 3.6%.
Preliminary wholesale inventories for the month of November in the United States fell by 0.2% from one month to the next, in line with the market consensus, after a decline of 0.3% in October, according to figures revealed today.
The American NAR (National Association of Realtors) housing sales promise index for the month of November 2023 was stable compared to the previous month, against a consensus of +0.8% and after a decline of 1.2% in revised reading for the month of October. The indicator stands at 71.6.
On Friday, operators will still follow the Chicago PMI manufacturing index for December (consensus 50).
The narrative on the markets remains essentially the same as in recent weeks… Operators anticipate a soft economic landing and a continued decline in inflation, a scenario which would allow the Fed to relax its monetary policy relatively quickly, after the accelerated hardening of recent months. According to the CME Group’s FedWatch tool, the probability of a new monetary status quo on January 31, 2024, for the next FOMC meeting, is more than 83%. The first rate cut could occur on March 20 (probability of more than 72% of a range 5-5.25% on the fed funds rate, compared to 5.25-5.5% currently).
The annual results will therefore be very positive for the main American stock indices, with the Nasdaq 100 even heading towards its best annual performance (+55% for now in 2023!) since 1999, according to Bloomberg… The Nasdaq Composite in its whole has recovered around 44% this year, its best performance since 2003. The index rich in technology stocks was helped this year by the rebounds of the ‘Magnificent Seven’ (Apple, Amazon, Alphabet, Meta, Tesla, Nvidia and Microsoft) after a difficult 2022.
On the eve of the last session of the year on Wall Street, attention is still focused on the positive seasonality of the end of December: Bank of America notes as well as the period of the ‘Santa Claus rally’, traditionally the last 5 days December and the first two of January, saw the S&P rise 79% of the time, with an average gain of 1.66%… However, we also observe that the S&P’s gains during the second half of December tended to be less robust in years where the first half recorded positive performances…
That said, the mechanism behind this trend is unclear, with some commentators attributing it to factors such as optimism for the new year and the impact of end-of-year bonuses, according to CNBC. Reuters highlights the impact of ‘FOMO’ behavior this year, and warns of extremely low trading volumes during the holiday season. Jefferies finally notes that January’s performance was always below average after a solid December…
Values
Apple (+0.2%). A federal appeals court has temporarily suspended the ban on the import and sale of Apple Watch Series 9 and Ultra 2 models from the Californian Apple group in the United States… Apple had been forced to stop selling these watches in the United States after the International Trade Commission determined that the Cupertino giant had violated patents owned by medical technology company Masimo. Apple can therefore resume marketing the watches concerned for the time being. The FT recalls that the Biden administration had previously rejected the idea of intervening in this patent dispute.
Apple had appealed the ban to the United States Court of Appeals for the Federal Circuit in Washington. The court lifted the ban on Wednesday while it considered the Californian group’s request for a longer-term pause during the appeal procedure.
Tesla (-3.1%) consolidates the day after an increase of 1.9% on Wall Street. The group appears to be moving closer to the official unveiling of its production plant in India, says Investor’s Business Daily, citing local media reports that the announcement could come in early 2024… The Texas electric vehicle giant is expected to establish its new factory in Gujarat, located on the west coast of India, and the official inauguration would take place during the ‘Vibrant Gujarat Summit’ in January, local media reported on Thursday… In addition, Tesla would develop a revamped version of the Model Y that would be produced in its Shanghai gigafactory, with production expected to start in mid-2024, according to Bloomberg.
Microsoft (+0.3%). Advertising revenues from the professional social network LinkedIn would have increased by 10% year-on-year to reach almost $4 billion in 2023, according to Investor Intelligence and the FT. The Financial Times also reports that the research group predicts that LinkedIn ad revenue will grow another 14% next year, although spending in 2023 will represent only 1.5% of digital advertising for brands in the United States. , compared to 27% for Google and 21% for Meta. Marketing agency executives and ad industry insiders told the FT that LinkedIn ad prices were increasing – with one citing a rise of up to 30% – in response to a increased interest as companies increasingly abandon X, the former Twitter.
Furthermore, as Microsoft prepares to end the year at or near its all-time high on Wall Street, Dan Ives of Wedbush is giving another layer: The specialist reports an increase in the stock’s price target. intermediate on Microsoft at $450, compared to $425, reflecting recent increasingly bullish controls on AI customers with “disruptive monetization” in sight for 2024.
Baidu (+3%). Ernie Bot, the Chinese Internet giant’s chatbot, rival to OpenAI’s ChatGPT, now has more than 100 million users, according to the group’s management. The Ernie Bot conversational robot was opened to the public in August.
VinFast Auto (+1.8%) does not really react, while the Vietnamese designer of electric vehicles has just sealed a first partnership with an American dealership, Leith Automotive, in North Carolina… Leith will also take care of repairs and vehicle maintenance. VinFast, now listed on the American market, has lost 45% since its IPO and capitalizes just under $20 billion. The group has a production plant in North Carolina worth 4 billion, which is expected to come into operation in 2026…
