Wall Street moved unevenly on Tuesday, with the further clear easing of bond rates ultimately supporting the technology sector with the Nasdaq in the green at the close. Job openings in the United States fell to their lowest level since March 2021 in October, reinforcing operators’ expectations of an upcoming Fed rate cut during H1 2024. The S&P 500 almost finished stable at 4,567 pts (-0.06%), the Dow Jones fell by 0.22% to 36,124 pts, but the Nasdaq advanced by 0.31% to 14,229 pts.
After a strong month of November, the American market is hesitant to go frankly higher… The (much anticipated) monthly employment figures at the end of the week (much more important than those of the day) should give the “the” and influence the next decisions of the Fed which meets on December 12 and 13. Money markets continue to count with a probability of 64.3% on a reduction in interest rates from the American Central Bank in March and with a probability which now reaches almost 90% on a reduction in May, according to the barometer ‘ Fedwatch’ from CME Group. Jerome Powell, the head of the Fed, had nevertheless tried to somewhat temper the enthusiasm of the markets last Friday, by emphasizing that “the work was still not finished” and that the Central Bank was still likely to raise rates according to the new data. But the market hardly seems to believe it…
On China’s side, Moody’s lowered the outlook associated with the country’s ‘A1’ sovereign rating to ‘negative’, emphasizing growing concerns about the debt level of the world’s second-largest economy. China’s use of fiscal stimulus to support local governments and spiraling decline in real estate pose risks to the national economy, according to the agency…
In the US macro agenda, the ISM Services Index stood at 52.7 in November, after a level of 51.8 a month earlier. The consensus was for an index of 52.3. The employment sub-index increased from 50.2 to 50.7 (51.4 consensus).
The US Department of Labor’s JOLTS report therefore showed that job openings were fewer than expected in October, down 617,000 to 8.733 million, compared to a consensus of 9.3 million and a reading of 9.35 million for the month of September. This is the lowest level since March 2021, a sign that the labor market in the world’s largest economy is showing serious signs of running out of steam.
On the Nymex, a barrel of WTI crude remains under pressure at $72.25. The dollar index nibbles 0.1 points against a basket of currencies at 103.7 pts. The yield on the 2-year T-Bond is 4.616%, compared to 4.193% on the 10-year and 4.337% on the 30-year.
Values
Robinhood rebounded 10.2% as the online brokerage platform reported an increase in cryptocurrency trading in November while bitcoin hit a 20-month high of more than $42,000 on Monday.
CVS Health climbs 3.7%. The American pharmaceutical distribution and insurance giant announced that it expects adjusted earnings of at least $8.50 per share for next year, as well as sales of at least $366 billion, compared to $345.5 $ billion consensus. Operating cash flow is expected to be at least $12.5 billion. For the current financial year, management still expects annual adjusted earnings per share ranging from $8.50 to $8.70. Cash flow from operations is now anticipated at the high end of the range of $12.5 billion to $13.5 billion. Finally, the board approved a quarterly dividend of $0.665 per share, up about 10%.
CVS Health also announced the launch of a new reimbursement model designed to simplify drug pricing for consumers. The approach aims to make the payment system more transparent by using a formula based on the cost of a drug, a fixed markup and fees that reflect the value of pharmacy services.
Tesla (+1.3%). A Danish union has announced it is joining the strike by Swedish Tesla workers by refusing to unload or transport cars made by the American automaker for customers in Sweden. The 3F union follows in the footsteps of the Swedish dockers’ union, which took a similar decision last month in support of the social movement initiated by the 130 mechanics who maintain Tesla vehicles in Sweden. These employees of the American manufacturer – which does not produce vehicles in Sweden – have been on strike since October 27 to demand the signing of a collective agreement. The general secretary of the 3F union, Jan Villadsen, said in a statement that he had taken the decision to support his Swedish colleagues because “the trade union movement is global in the fight for the protection of workers.” He clarified that the strike by Danish dockers and truck drivers only affected cars intended for the Swedish market.
AT&T (+3.3%) announced that it had chosen Ericsson to build a telecommunications network that uses only Open RAN (Open Radio Access Network) technology and that will cover 70% of its wireless traffic in the United States by the end of 2026. For Ericsson, already responsible for about two-thirds of AT&T’s U.S. network, the deal represents a significant victory over rival Nokia, which accounted for the other third of AT&T’s business. According to ‘Bloomberg’, the project could cost nearly $14 billion over five years. AT&T, the third-largest wireless carrier in the United States, said the new network would allow it to “rapidly capitalize on the next generation of wireless technology.” Open RAN technology allows operators to build telecommunications networks using equipment from several different vendors, rather than having to commit to using equipment from a single vendor.
AutoZone advances 0.2%, while the auto parts distributor reported a 10% increase in its quarterly profit, higher than analysts’ expectations. The company, which competes with Advance Auto Parts and O’Reilly Automotive, said its net sales in the quarter ended Nov. 18 rose about 5.1 percent to $4.19 billion. Domestic same-store sales rose 1.2% while international revenue jumped 25.1% (at constant currencies). Net income rose 10% to $593 million, or $32.55 per share, from $539 million or $27.45 per share a year ago. Operating income improved by 17% to $846.6 million. With the new car market on the path to a nascent recovery after months of supply chain woes and sluggish consumer spending due to high interest rates and inflation, the group has benefited from demand for its DIY kits as more people maintain their existing vehicles instead of buying new ones.
Eli Lilly and Co (-0.5%) announced that its recently approved obesity drug Zepbound is now available in US pharmacies.
Take-Two Interactive Software fell 0.5%. The group presented the trailer for the final part of its highly anticipated video game “Grand Theft Auto VI”, which will be released in 2025.
Johnson & Johnson (-0.2%) forecasts 5-6% revenue growth for next year, building on strong demand for cancer treatments Darzalex and Carvykti and resilience sales of its blockbuster drug Stelara. Ahead of an investor day scheduled for Tuesday, J&J said it expects sales of its pharmaceutical unit to grow at a compound annual rate of 5% to 7% between 2025 and 2030. Sales of Stelara, Europe’s flagship psoriasis treatment, are expected to come under pressure from next year due to the expiration of a key patent on the drug. The drug is also expected to face competition in the United States from 2025. “We believe we are very well positioned, even despite what will be the start of biosimilars entering the Stelara market outside of the United States in the middle or second half of 2024,” Joseph Wolk, chief financial officer, told Reuters.
The company has focused on its drugs and medical devices businesses since spinning off its consumer health unit earlier this year. J&J, which plans to launch at least 20 new therapies by 2030, said more than 10 of its products have the potential to generate more than $5 billion in sales in a peak year – including new treatments for cancer Talvey and Tecvayli. The company expects adjusted operating earnings of $10.55 to $10.75 per share in 2024, including a 15-cent impact from its recent acquisition of privately held medical device maker Laminar.
Virgin Galactic returns another 1% after falling 17.5% on Monday following billionaire Richard Branson’s decision to rule out any additional liquidity injection into his space travel company, according to information from the ‘Financial Times’.
Blackstone (-0.2%) is studying the possibility of a sale of Anthos Therapeutics, its biopharmaceutical subsidiary which launched a new generation of anticoagulants in partnership with Novartis, according to sources close to the matter cited by ‘Reuters’.