Wall Street is hesitant this Wednesday, the day after a surge led yesterday by the Nasdaq (+1.54%) with Oracle and Nvidia. The markets reacted favorably yesterday to mixed US inflation figures for the month of February. Operators are still closely monitoring the Nvidia file, which has been very volatile since its sudden downward turn on Friday. Last night, the stock recovered by 7.2%. Today, it is falling for the time being despite a broker’s advice… The S&P 500 now returns 0.05% to 5,172 pts, while the Dow Jones gains 0.34% to 39,138 pts. The Nasdaq lost 0.33% to 16,212 pts, still depending on Nvidia’s moods.
Bitcoin is around $72,500, up more than 8% over one week. On the Nymex, a barrel of WTI crude rose 2% to $79.1. An ounce of gold gains 0.3% to $2,173. The dollar index lost 0.1% against a basket of currencies.
Yesterday, the markets were therefore following the American consumer price index for February 2024, which showed an increase of 0.4% compared to the previous month, against a FactSet consensus of +0.4%. Excluding food and energy, volatile elements, the February CPI also increased by 0.4% compared to January, while the consensus was +0.3%. Over one year, the consumer price index increased by 3.2%, or 3.8% excluding food and energy, against consensuses of +3.1% and +3.7% respectively… The deficit February budget, announced yesterday evening, stood at $296.3 billion, close to the Bloomberg consensus but higher than the FactSet consensus.
Oil prices are rising significantly after the announcement of a surprise drop in crude reserves in the United States last week. According to the US Department of Energy, domestic crude stocks, excluding strategic reserves, fell by 1.5 million barrels during the week ended March 8 to 447 mb. The consensus was expecting an increase of 0.9 mb. Gasoline stocks fell by 5.7 mb (-1.9 mb expected), and those of distilled products increased by 0.9 million barrels (-0.2 mb expected).
Tomorrow Thursday, the program will be quite busy, with weekly unemployment registrations for the week ending March 9 (consensus 218,000, announcement at 1:30 p.m.), the producer price index for the month of February (same time, consensus + 0.3% compared to the previous month and +0.2% excluding food and energy; +1.1% and +1.9% year-on-year), as well as February retail sales (1:30 p.m., consensus +0 .7% compared to January, +0.4% excluding automobiles, +0.2% excluding automobiles and gasoline). Business inventories for the month of January will also be announced on Thursday.
Finally, on Friday, for Four Witches Day, investors will follow the New York Fed’s Empire State manufacturing index for the month of March (consensus -8), import and export prices for the month of February, industrial production numbers for February (consensus stable), and the University of Michigan’s preliminary consumer sentiment index for March (consensus 77.4).
According to the FedWatch tool this Monday, the probability that the Fed will leave its rates unchanged at the highest in more than 20 years on March 20, between 5.25 and 5.50%, on the occasion of its next monetary meeting, is located at 99%. The probability of an additional status quo on May 1, at the next meeting, reaches 88%. The probability of a first rate cut on June 12 remains significant, while the ‘probability’ of status quo in June stands at 34%.
Among the major investment banks in the market, note that Bank of America has just raised its 2024 earnings per share estimate on the S&P 500 to $250, compared to $235 previously. Goldman Sachs specifies for its part that risk assets should continue to grow, driven by strong economic growth in the United States and a slowdown in inflation. The macroeconomic environment would therefore be sufficiently positive to mask the high level of valuations, while underlying inflation should resume its decline… Finally, speaking on the occasion of an Australian summit, the boss of JP Morgan’s Jamie Dimon said he doesn’t think the Fed should start cutting rates in June.
In Wall Street company news, Lennar, Dollar Tree, Williams-Sonoma, UiPath and SentinelOne report this Wednesday, while Adobe, Dollar General, Ulta Beauty, Wheaton Precious Metals and Dick’s Sporting Goods announce Thursday. Jabil finally publishes on Friday.
Values
Dollar Tree (-15%!), the American discount retailer, published revenues for its 2023 fiscal year up 8% to $30.6 billion, with comparable growth of 5.8% for the brand. eponymous and a decline of 1.2% at Family Dollar in the fourth quarter alone. Adjusted earnings per share for the fourth quarter were $2.55, an increase of 25%, while adjusted EPS for the year fell 18% to $5.89. The consensus for the closed quarter was $2.65. For the 2024 fiscal year this time, the group is considering revenues ranging from $31 to $32 billion, while diluted EPS is anticipated between $6.70 and $7.30.
Dollar Tree is taking action after the lower-than-expected quarter. The group unveils plans to close 970 Family Dollar stores, including 600 in the first half and 370 more in the second half. The group recognized a charge of $594.4 million for portfolio optimization and goodwill impairment charges of $1.07 billion, as well as $950 million of other items in the quarter. Thus, Dollar Tree deplores a net loss of $1.71 billion in the fourth quarter compared to a profit of $452 million a year before.
IBM (stable), the American technology giant, would cut marketing and communications positions according to CNBC. The group thus declared yesterday Tuesday to employees of its marketing and communications division that it was going to considerably reduce its workforce, according to a person with knowledge of the subject, cited by CNBC. Jonathan Adashek, IBM’s communications director, reportedly made the announcement during a roughly seven-minute meeting with staff members at the unit, said the source, who asked to remain anonymous because the news n has not been made public. In December, IBM CEO Arvind Krishna told CNBC that the company was “massively upskilling” its employees in AI, after announcing a plan in August to replace nearly 8,000 jobs with AI .
Tesla (-3%) corrects again this Wednesday on Wall Street, victim of a downgrade from Wells Fargo. The broker has just revised its recommendation from ‘line weight’ to ‘underweight’. The intermediary’s price target on Tesla is significantly reduced, to $125 from $200 previously. The broker sees declining risks on sales volumes while price reductions have an increasingly weak impact. Thus, Wells fears disappointing deliveries and further price cuts, which should translate into downward revisions to earnings per share estimates.
Eli Lilly (stable), the American pharmaceutical company, has unveiled an agreement with Amazon for the delivery of medicines via the direct-to-consumer sales service LillyDirect. Lilly launched the platform in January to allow patients to get their medications, including obesity treatment Zepbound, delivered via online pharmacy Truepill. Now, treatments sent to Lilly Direct Pharmacy Solutions will be delivered by Amazon Pharmacy or Truepill depending on the patient’s health coverage, Reuters says.
GE HealthCare Technologies drops nearly 5% on Wall Street, while its parent company GE will reduce its stake in the capital of the medical equipment supplier a little further as part of a secondary offering of 14 million of shares, revised upwards since 13 million shares were previously envisaged. GE HealthCare is not selling any securities as part of the transaction and will not receive proceeds from the sale, as the transaction takes the form of a debt-for-equity exchange.
Nvidia (-2%), boosted yesterday by Oracle’s allusion to a future partnership, remains volatile this Wednesday. Note that Bank of America today increased its price target on the graphics processor and AI giant from $925 to $1,100. The broker also maintains its purchase recommendation. BofA considers the value “still attractive”, before the GTC technology conference which begins on March 18. The intermediary notes that the PER of the file remains well anchored in the historical average, despite the rally of recent months.
