Wall Street has been falling from its historic highs, following worse-than-expected inflation figures. The S&P 500 lost 1.13% to 4,965 pts, the Dow Jones 1.26% to 38,310 pts and the Nasdaq 1.14% to 15,760 pts. On the Nymex, a barrel of WTI crude gained 0.3% to $77.2. An ounce of gold fell 1.3% to $2,005. The dollar index gained 0.6% against a basket of reference currencies.
Fears are therefore focused on a less rapid slowdown in inflation than expected, which could prevent the Fed from reducing its rates… Neel Kashkari, the president of the Minneapolis Fed, spoke yesterday, as did Governor Michelle Bowman, the president of the Richmond Fed, Thomas Barkin, and that of the Atlanta Fed, Raphael Bostic. Bowman said risks remained in the fight against inflation and it was therefore too early to consider an immediate rate cut. Thus, in the immediate future, monetary easing would not be appropriate in her opinion… Barkin echoed these comments, judging that the Fed was getting closer to the inflation target without having achieved it. He notes that companies could be slow to abandon their practices of significant price increases which have boosted margins since 2021…
Raphael Bostic, the head of the Atlanta Fed, a voting member of the Fed’s monetary policy committee, ruled that a rate cut should not be expected for several months. In an interview with CNN, the official indicated that the long-awaited monetary easing from the Fed should not occur before the summer. He anticipates that the inflation rate in the United States, currently close to 3%, will fall back to “the bottom of 2%” by the end of 2024. In such a context, he therefore sees the first declines rate during the summer. Until then, the rate range on fed funds would therefore remain at a 23-year high.
The US inflation figures for January 2024 came out somewhat disappointing. The consumer price index for January 2024 increased by 0.3% compared to the previous month and by 3.1% year-on-year, against respectively +0.2% and +3% of market consensus. . Excluding food and energy, the CPI increased by 0.4% compared to the previous month and 3.9% year-on-year, compared to 0.3% and 3.7% consensus.
According to the CME Group’s FedWatch tool, the probability is now 92% of a new status quo from the Fed on March 20, at the end of the next monetary meeting. It is also now the hypothesis of a status quo which prevails for May 1, with a 60% probability of a range of 5.25-5.50%, unchanged, on fed funds, at the end of the following FOMC meeting…
On Wednesday, operators will follow at 4:30 p.m. the weekly report from the US Department of Energy concerning US domestic oil stocks, for the week ended February 9. Austan Goolsbee, the head of the Chicago Fed, will also provide some comments.
Thursday, the program will be quite busy, with from 2:30 p.m. weekly unemployment registrations for the week ending February 10 (FactSet consensus 220,000), retail sales for the month of January (FactSet consensus -0.1% compared to the previous month , +0.2% excluding automobiles and +0.4% excluding automobiles and gasoline), import and export prices for January (stable consensus for imports), as well as the Empire State manufacturing index of the New York Fed for the month of February (consensus -11) and the Philadelphia Fed’s manufacturing index for the same month (consensus -8.5).
Also on Thursday, investors will follow the figures for American industrial production for the month of January at 3:15 p.m. (consensus +0.3% compared to the previous month, 78.8% capacity utilization rate). Inventories and sales of companies for the month of December, as well as the NAHB index of the American real estate market for February (consensus 46), will also be known on Thursday, at 4 p.m…. Note also that Raphael Bostic, head of the Fed ‘Atlanta, will take place the same day.
Finally, on Friday, operators will be attentive to the figures for construction starts and building permits for January (2:30 p.m., consensus 1.47 million for construction starts and 1.515 million for permits), to the producer price index of January (2:30 p.m., consensus +0.1% compared to the previous month or +0.7% over one year; +0.1% and +1.8% excluding food and energy), as well as the index preliminary US consumer sentiment from the University of Michigan for the month of February (4 p.m., consensus 80).
The quarterly financial release season is coming to an end on Wall Street, but there are still a few notable announcements this week. Coca-Cola, Shopify, Zoetis, Marriott, Moody’s, Ecolab, Datadog, Biogen, GlobalFoundries and Restaurant Brands announced before market on Tuesday. Airbnb, AIG, Akamai and Welltower, publish after the close.
Barrick Gold, Global Payments, Martin Marietta, Williams Companies, Kraft Heinz and CME Group, reveal their results before market on Wednesday, while Cisco, Equinix, Occidental Petroleum, HubSpot and Arch Capital are expected after market the same day.
Deere, West Pharmaceutical Services, Hyatt Hotels and Southern Company, publish Thursday, before market. Applied Materials, DoorDash, Digital Realty Trust, DraftKings, Ingersoll Rand, The Trade Desk, Coinbase, Consolidated Edison, Roku and Dropbox, reveal their accounts after the close on Thursday.
Values
Biogen (-7%), American biotechnology group, announced adjusted earnings per share of $2.95 for the closed quarter, lower than the market consensus, for revenues of $2.39 billion, down 6%. year-on-year. Biogen forecasts adjusted earnings per share of $15 to $16 per share for 2024, guidance surrounding consensus and representing growth of 5% in the middle of the range. Product sales are expected to be stable, while those of Leqembi should gradually gain momentum in the treatment of Alzheimer’s.
Shopify (-8%), the Canadian online commerce platform, listed on Wall Street, drops out on the stock market. However, the group posted revenues and profits higher than market expectations for the closed quarter. Revenue rose 23.6% to $2.14 billion. Adjusted earnings per share were 34 cents, compared to 7 cents for the comparable period last year. Revenue consensus was $2.07 billion, while adjusted EPS was expected at 30 cents. For its first fiscal quarter, which has just begun, the group anticipates revenue growth in the low twenties, while the consensus was just 20%.
Coca-Cola (stable) announced revenues for its fourth fiscal quarter up 7.4% to $10.95 billion, compared to a market consensus of $10.7 billion. Adjusted earnings per share were 49 cents, in line with market expectations. The increase in prices allowed an improvement in the operating margin to 21%, compared to 20.5% a year before, during the same period. Over the quarter, the increase in volumes stood at 2%, while average sales prices increased by 9%. Annual adjusted profit for 2024 is now expected to increase by 4 to 5%, compared to a consensus of 4.5%. Organic growth in annual revenues is anticipated between 6 and 7%, compared to 12% in 2023.
Tripadvisor (+12%) jumps on Wall Street, while the online tour operator has set up a committee to study a potential sale of the group. The current market capitalization stands at $3.1 billion. Tripadvisor, Inc. announced the formation of a special committee composed of independent directors of the Board of Directors. The mandate of the Special Committee is to evaluate any proposal that may be presented for a potential transaction, as well as any alternatives thereto, with respect to Tripadvisor. The Special Committee has retained Centerview Partners LLC as financial advisor in connection with its evaluation.
Cadence Design Systems (-3%) declined the day after the quarterly results. The Californian group is counting on a decline in revenues in the first fiscal quarter, between $990 million and $1.01 billion, while the market consensus was at $1.08 billion. Quarterly adjusted earnings per share are expected between $1.10 and $1.14, also well below expectations. For the closed quarter, adjusted EPS was $1.38, versus $1.33 consensus, while revenues stood at $1.07 billion, in line with market expectations. Cadence, however, counts Nvidia, Arm and Intel among its customers. The group offers chip design solutions and other very diverse products.
JetBlue Airways (+12%) is on fire on Wall Street, while activist investor Carl Icahn declared a 9.91% stake in the capital of the American airline. Icahn Enterprises LP thus took nearly 10% of the shares, which represents an amount of more than $200 million, according to the firm’s declarations to the Securities & Exchange Commission. Icahn Enterprises considers JetBlue stock to be undervalued and believes that the file presents an attractive investment opportunity. Icahn’s firm plans to seek board representation.
Zoetis (-5%), the leading American laboratory in animal health, published revenues of $2.2 billion for its fourth quarter, an increase of 8%, as well as a net profit of $525 million, or 1. $14 per share (+15%). Adjusted earnings per share were $1.24, while the consensus was $1.32. Revenues were expected at 2.19 billion. This is therefore a rare disappointment in terms of profits for the group. For fiscal 2024, revenues are expected between $9.075 billion and $9.225 billion, while adjusted EPS is expected between $5.74 and $5.84.
Marriott (-5%) posted robust fourth quarter and full year accounts. Quarterly net profit was $848 million, up 26%, while earnings per share were $2.87 compared to $2.12 a year earlier. Adjusted earnings per share reached $3.57, compared to $1.96 a year earlier. Adjusted EBITDA was $1.197 billion, up from $1.09 billion a year earlier.
Moody’s (-7%) announced fourth-quarter revenues of $1.5 billion, an increase of 15% year-on-year, bringing annual revenues to $5.9 billion. Diluted earnings per share increased 38% to $1.85 for the quarter ended. For fiscal 2024, Moody’s forecasts diluted earnings per share ranging from $9.45 to $10.20, as well as adjusted EPS ranging from $10.25 to $11. The consensus was $11.1 adjusted EPS.
