Wall Street lost ground on Tuesday at the close, with the S&P 500 dropping 0.20% to 4,538 pts and the Dow Jones losing 0.18% to 35,088 pts. The Nasdaq lost 0.59% to 14,199 pts. The Nvidia file remained closely monitored, before its quarterly publication. Microsoft also remains under scrutiny, after having stabilized the situation on the side of OpenAI, following the unexpected ousting of CEO Sam Altman… Announcements from major American distributors weighed on the indices, with in particular disappointments on the side of Lowe’s or Best Buy…
On the Nymex, a barrel of WTI crude lost 0.2% to $77.7. The dollar index fell by 0.1% against a basket of reference currencies. On the bond markets, the yield on the 2-year T-Bond stands at 4.88%, compared to 4.40% for the 10-year and 4.56% for the 30-year.
On the economic front on Wall Street, the Chicago Fed’s national activity index for October 2023 stood at -0.49, compared to a revised reading of -0.02 a month earlier. The three-month average stands at -0.22 compared to 0 previously. A negative indicator signals below-trend growth.
According to today’s report from the American National Association of Realtors this Tuesday, resales of existing homes for the month of October stood at a rate of 3.79 million units, compared to 3.9 million market consensus and 3.95 million for the revised reading of the previous month. This marks a 4.1% decline in resales month over month and a drop of 14.6% year over year.
The minutes of the last monetary meeting of the Fed did not hold any big surprises: The officials of the American Federal Reserve agreed during their last meeting that they could adopt a “cautious approach” on interest rates, believing that further increases would be necessary only “if” data suggested insufficient progress against inflation…
According to the minutes of the monetary policy meeting of October 31 and November 1, “all participants agreed that the Fed’s Monetary Policy Committee was in a position to proceed cautiously…” Participants noted that further tightening of monetary policy would be appropriate if information indicated that progress toward the Fed’s inflation target (of 2 percent) was insufficient.
These “minutes” show that officials of the American central bank had to deal with contradictory economic signals during their meeting, at the end of which they once again decided to keep interest rates unchanged.
Inflation “remained well above” targets, which should force Fed policy to “remain on a restrictive stance for some time” until inflation falls “sustainably.” ..
On Wednesday, investors will be watching for durable goods orders, weekly jobless claims, as well as the University of Michigan Consumer Sentiment Index and the weekly report on U.S. domestic oil stocks. On Thursday, Wall Street will be closed for Thanksgiving. The American stock market will only resume for a shortened session closing at 7 p.m. French time on Friday – with the publication of the American composite flash PMI index.
Values
Nvidia (-0.9%) is consolidating, after having reached new historic highs at $500 the day before before its third quarter financial publication. Nvidia forecast revenues of $16 billion at the end of August, plus or minus 2%, while the consensus at the time was only $12.6 billion. GAAP and non-GAAP gross margins for the period are expected to be 71.5% and 72.5% respectively, plus or minus 50 basis points, according to the group’s latest guidance. The current market consensus is for $3.37 quarterly earnings per share on $16.18 billion in revenue.
Nvidia has posted a performance of more than 240% on Wall Street this year and a market capitalization of more than $1.2 trillion – unheard of in the sector. This is the stock that has undoubtedly benefited the most on Wall Street in recent months from the incredible enthusiasm around the theme of artificial intelligence. The group therefore publishes its financial results after market trading this evening. This will therefore be a major test for the markets, as the Nasdaq has just risen very significantly by 10% over one month with hopes of an end to the Fed’s monetary tightening. Nvidia’s results will be all the more scrutinized as major announcements are rare this week on Wall Street.
Microsoft (-1.1%). Satya Nadella, the CEO of the software giant, who announced yesterday that he had recruited Sam Altman and Greg Brockman, previously CEO and Chairman of the Board of OpenAI, to head a new AI entity at Microsoft, seems to remain open to all possible configurations. While Microsoft has invested billions of dollars in OpenAI, creator of ChatGPT, and hopes to sell its products more expensively by integrating the startup’s AI, Nadella told CNBC that he is open to Altman returning to the role. management of OpenAI. “Look, it’s up to the board, management and employees of OpenAI to choose,” Nadella said. “We chose to explicitly partner with OpenAI and we want to continue to do so, and obviously, it depends on whether the OpenAI people stay there or come to Microsoft,” added the Microsoft CEO…
Agilent (+8.7%), the American giant of measuring instruments and scientific solutions which had reduced its annual financial estimates last summer, has this time reassured the markets. Agilent expected revenues ranging from $6.80 billion to $6.85 billion for the fiscal year, and finally published last night a turnover of $6.83 billion, stable in consolidated data and up 1.5 % organic. Annual GAAP net income was $1.24 billion, for EPS of $4.19, also stable. Adjusted earnings per share were $5.44, above guidance of $5.40 to $5.43.
For the 2024 fiscal year just started, Agilent expects revenues ranging from 6.71 to 6.81 billion, down 0.3 to 1.8%, and adjusted earnings per share ranging from 5.44 to 5. $55. For the first quarter alone, revenues are anticipated between 1.555 and 1.605 billion, for an adjusted EPS of $1.2-1.23. The consensus was $1.32 adjusted EPS and $1.67 billion in revenue for the quarter, and $5.61 adjusted EPS for the year on $6.98 billion in revenue. The forecasts are therefore, objectively, quite weak…
Zoom Video Communications (stable), the Californian giant of remote conferencing and mobile collaboration services, revealed quarterly accounts better than expectations and increased its annual forecasts. For its third fiscal quarter, the group achieved revenues of $1.14 billion, an increase of 3.2% year-on-year. The consensus was $1.12 billion. Adjusted EPS was $1.29, compared to the market consensus of $1.1. Revenues for the current quarter are cautiously expected between $1.125 and $1.13 billion, while adjusted earnings per share for the period are expected at $1.14 versus a consensus of $1.09. The San Jose, Calif.-based company also raised its earnings per share guidance to between $4.93 and $4.95 for the fiscal year, up from $4.63 to $4.67 previously. Revenue is expected between $4.506 billion and $4.511 billion.
Keysight Technologies (-0.2%). For the fourth fiscal quarter, the American group, which provides measurement and testing instruments and software, posted adjusted earnings per share of $1.99 compared to a consensus of $1.87 and a level of 2 .14$ a year ago. Revenues totaled $1.31 billion, just in line with expectations, compared to $1.44 billion a year earlier. Consolidated net profit was $226 million, compared to $299 million a year earlier. Keysight’s fiscal first quarter 2024 revenue is expected to be between $1.235 billion and $1.255 billion, compared to consensus of $1.24 billion. Adjusted earnings per share are expected between $1.53 and $1.59, compared to $1.67 for the market consensus.
Baidu (+1.9%), the Chinese search engine listed on Wall Street, exceeded market expectations for its third fiscal quarter. The group has diversified its activities, particularly in the field of AI. Quarterly revenue rose 6% to 34.4 billion yuan, about $4.8 billion. Activity is therefore very slightly higher than market expectations. Net profit reached 6.7 billion yuan in the quarter ended in September, much higher than expected. The group continues to integrate its AI robot Ernie into its products and monetizes its chatbot. The group’s adjusted quarterly profit was 7.3 billion yuan, approximately $996 million, or $2.80 per share.
Lowe’s (-3.1%), the American retailer rival to Home Depot, announced profits for the quarter ended at the beginning of November above expectations, but the group is warning about its prospects. The retailer of home-related products posted adjusted earnings per share of $3.27 for the closed period, its third fiscal quarter, compared to a consensus of $3.03. Like-for-like sales declined 7.4% for this quarter. Net profit was $1.8 billion. Total quarterly sales were $20.5 billion, compared to $23.5 billion for the comparable period last year. For the financial year, sales are now expected at around 86 billion, compared to 87 to 89 billion dollars previously. Comparable performance would be negative 5%, compared to a previously anticipated decline of 2 to 4%. The annual adjusted operating margin is expected at 13.3%, compared to previous guidance ranging from 13.4 to 13.6%. Adjusted EPS is expected at $13, compared to $13.2 to $13.6 previously.
Best Buy (-0.7%), the American retailer of electronic products, is losing ground on Wall Street. The group indicated in fact that it expected a more significant drop in revenue than expected in the current 2024 fiscal year. It now envisages a drop in activity on a comparable basis of 6 to 7.5% over the financial year, compared to -4.5 to -6% previously. For the just ended fiscal third quarter, the group posted sales down 6.9% on a comparable basis, GAAP diluted earnings per share of $1.21 and adjusted earnings per share of $1.29. Total revenues were $9.76 billion, compared to $10.59 billion a year earlier. Non-GAAP operating margin fell to 3.8% from 3.9% a year earlier. The consensus was for $1.18 in quarterly adjusted EPS and $9.9 billion in billings.
For fiscal 2024 as a whole, revenue is expected between $43.1 billion and $43.7 billion, a downward revision from prior estimates. Annual adjusted earnings per share are expected between $6 and $6.30, compared to $6 to $6.40 previously.
Medtronic (+4.6%) revised its profit estimates for the financial year upwards, for the second time this year. The group anticipates sustained demand for its medical devices. It forecasts adjusted earnings per share ranging from $5.13 to $5.19 for the year. Organic sales growth is now expected at 4.75%, compared to 4.5% previously. For its second fiscal quarter 2024, ended at the end of October 2023, the group achieved revenues of $8 billion, an increase of 5.3% in consolidated data and 5% organically. Adjusted earnings per share were $1.25. The consensus was $1.18 adjusted EPS for $7.92 billion in revenue…
