Wall Street ended slightly higher on Monday after a hesitant session. The S&P 500 rose 0.26% to 5,360 pts, while the Dow Jones gained 0.18% to 38,868 pts. The Nasdaq is still gaining 0.35% from its peaks at 17,192 pts. The week will still be very lively on the American markets, with the Fed’s monetary meeting and its new status quo expected almost certainly on Wednesday, Apple’s WWDC conference which should focus on artificial intelligence, the first Nvidia’s post-split listing by ten, but also the shareholder vote on Elon Musk’s very juicy $56 billion compensation package…
On the Nymex, a barrel of WTI crude regained 2% to $78. The dollar index gained 0.4% against a basket of reference currencies. Bitcoin is below $70,000.
On the economic front, operators will follow the American consumer price index for May on Wednesday (consensus +0.1% compared to the previous month or +3.4% over one year; +0.3% and +3.5% excluding food and energy), the weekly report on US domestic oil stocks, the US budgetary balance, as well as of course the Fed’s monetary statement and Jerome Powell’s press conference… CME Group’s FedWatch tool gives a more than 99% probability of a new monetary status quo, leaving rates unchanged between 5.25 and 5.5%, at a 23-year high. The probability of status quo on July 31, after the next meeting, reaches more than 91%. That of a first monetary easing no later than September 18 is around 51%. The very solid US employment report released on Friday further pushed back expectations of monetary easing.
On Wednesday, markets will also monitor the Fed’s “dot plot”, which presents central bankers’ rate expectations in the form of a dot graph.
On Thursday, investors will be attentive to weekly unemployment claims, as well as the producer price index for the month of May. John Williams, head of the New York Fed, will also speak during the day. Finally, on Friday, the markets will follow import and export prices, the American consumer sentiment index from the University of Michigan, as well as a speech from Austan Goolsbee, who heads the Chicago Fed …
Values
Apple (-1.9%) is kicking off its Worldwide Developer’s Conference this Monday… The keynote by Tim Cook, general manager of the group, in Cupertino this Monday, will provide the first elements. WWDC 2024 should therefore mark Apple’s offensive in generative AI. In May, during the presentation of the results, Cook suggested that the group had advantages that differentiated it in this new era of AI, with its unique combination of hardware, software and services. So it’s artificial intelligence that will likely dominate the debates, with possibly a new generative AI-powered version of the Siri smart assistant, which could then control individual features in apps and become much more versatile. Apple’s AI features could also affect a multitude of other applications, including Messages, Notes and Safari, according to a Bloomberg specialist.
Recall that Apple has reportedly held discussions with OpenAI to obtain a ChatGPT license and separate discussions with Google to obtain a Gemini license.
Nvidia (+0.7%) also remains under close surveillance, close to historic peaks. The stock has gained more than 20% since the announcement of its split by ten – and remarkable results. Last week at the Computex conference in Taiwan, local star Jensen Huang revealed his group’s mid-term plans and previewed new generations of GPUs for AI, at a pace of a new platform per year. The split by ten of the action was effective Friday evening. The stock closed around $1,209 on Friday, which would give ten shares at $120.9 today. Nvidia’s capitalization is now around $3,000 billion, very close to that of Apple, and even the world’s largest capitalization, Microsoft… Speculation could also concern the chances of a possible inclusion of the star of the AI within the historical Dow Jones index. Indeed, the split of the action now places Nvidia in the race for integration into the DJIA. The file would then follow other “tech” giants such as Apple and Amazon. If included, Nvidia could kick its rival Intel out of the index…
GameStop (-12%). The stock had already plunged by 39.4% on Friday, while the video game retailer once again took advantage of the ambient euphoria to raise massive funds, selling 75 million shares. The stock has been extremely volatile since influencer Keith Gill (Roaring Kitty), who has a very significant buying position, returned to social media to support the stock. On Friday, GameStop also published sharply falling quarterly sales and a result in the red.
Tesla (-2%). Tesla’s annual shareholder meeting is scheduled for Thursday after the close and must resolve the thorny issue of Elon Musk’s $56 billion compensation package, its chief executive. A negative vote would be very badly received by the multi-billionaire, who suggested that in such a case he could develop his AI projects independently. Thus, the decision of the shareholders will be of capital importance. Robyn Denholm, the president of Tesla, judged that this kind of exceptional package was needed to motivate Musk. Obviously, such compensation, representing approximately 10% of the company’s market capitalization, is unprecedented in the history of American companies. In a survey of around a hundred investors, Morgan Stanley found that the majority believe that approval of the package would increase Tesla shares.
Microsoft (+0.9%) has other strings to its bow than AI!… The Redmond software giant launched its annual Xbox Games Showcase on Sunday and unveiled a new, fully digital version of its Xbox Series X consoles and S as well as trailers for more than a dozen games, including the next installment of ‘Call of Duty’ (‘Call of Duty: Black Ops 6’ expected in October) and ‘Doom: The Dark Ages’, indicates Reuters. “The Games Showcase comes at a crucial time for Xbox and Microsoft as the gaming industry faces a downturn and publishers grapple with declining sales, layoffs and studio closures,” notes l ‘agency. Microsoft presented three consoles including a discless version of the Xbox Series X and S consoles, and a special edition of the Series X with 2 terabytes of storage.
Meta (+1.9%), formerly Facebook, is developing artificial intelligence technology specifically for Europe, according to Reuters, which reflects linguistic, geographical and cultural references. Meta, which confirmed the plans, will train its large language models using content that European Union citizens have chosen to share publicly on its platforms such as Instagram and Facebook. Meta used public posts on Facebook and Instagram to train parts of its new virtual assistant Meta AI, but excluded private posts, Reuters recalls.
Southwest (+0.3%). Elliott Investment Management has built a stake worth nearly $2 billion in the American airline. The Wall Street Journal reports that the activist investor intends to push for changes to remedy the underperformance of the Dallas company. The WSJ cites sources close to the matter on this subject.
Berkshire Hathaway (-0.7%), the investment firm of Omaha guru Warren Buffett, acquired 2.57 million additional shares of the oil group Occidental Petroleum (+2%). The purchases were made between June 5 and 7. Berkshire now holds 250.6 million Occidental shares. This represents a stake of 28%.
Oracle (-1.1%), the American management software giant, will publish its latest quarterly financial results on Tuesday evening, after trading on Wall Street. Caseys General Stores (stable) also announces Tuesday after the close. Broadcom (+2.4%) will publish its accounts on Wednesday evening, while Adobe (-1.1%) will reveal its latest figures on Thursday, after market close.
